Which of the following is used to explain why a consumer's willingness to buy a cell phone increases as the number of other people who own and use cell phones increases?
A)network externalities
B)market failure
C)diminishing marginal utility
D)the income effect of a price change

Question

Quizplus · Accepted Answer

Network externalities refer to the idea that the value of a product increases as more people use it. In the case of cell phones, as more people own and use them, the network of people who can be called or texted expands, making them more valuable to consumers. This results in a positive externality for the market, where the benefits of cell phone use spill over to others who may not have purchased the product themselves.

Which of the Following Is Used to Explain Why a Consumer's