As output increases
A) the network effect puts downward pressure on prices while the price effect puts upward pressure on prices.
B) the network effect puts upward pressure on prices while the price effect puts downward pressure on prices.
C) both the network effect and the price effect put upward pressure on prices.
D) both the network effect and the price effect put downward pressure on prices.

Question

Quizplus · Accepted Answer

The network effect increases the value of a product as more people use it, potentially allowing for higher prices. The price effect, however, suggests that as output increases, prices may need to decrease to sell the additional units.

As Output Increases