What is a network externality?
A)It refers to having a network of suppliers and buyers for a good or service.
B)It refers to lobbying to form a public enterprise.
C)It refers to a situation in which a product's usefulness increases with the number of people using it.
D)It refers to a product that requires connection to a network for it to be useful.

Question

Quizplus · Accepted Answer

A network externality refers to the situation in which a product's value or usefulness increases as more people use it. This is also known as a network effect, as the product becomes more valuable because it is part of a larger network of users. For example, social media platforms like Facebook and Twitter have a network externality, as their value increases as more users join and contribute content.

What Is a Network Externality