When a consumer joins a network, she generates a(n)
A) private benefit only.
B) private benefit and an external benefit equal to the vertical distance between the private demand curve and the social demand curve.
C) private benefit and an external benefit equal to the horizontal distance between the private demand curve and the social demand curve.
D) external benefit only.

Question

Quizplus · Accepted Answer

When a consumer joins a network, she generates both a private benefit (the direct benefit she receives from joining the network) and an external benefit. The external benefit is represented by the vertical distance between the private demand curve and the social demand curve, as it reflects the additional value that the consumer's participation in the network provides to other users.

When a Consumer Joins a Network, She Generates A(n)