In a class of 10 students,two of the students owned cell phones.Hence,only these two students could send text messages to each other in the class.A few days later,two more students got their own cell phones.This increased the habit of texting via phones.In a few months' time,all the students in the class got cell phones and thus,cell phones became more valuable in their class.Which of the following phenomena had occurred in the class?
A)Network internality
B)Network externality
C)Supply side economies of scale
D)Negative network effect

Question

Quizplus · Accepted Answer

The phenomenon that occurred in the class is Network externality. It is because the value of owning a cell phone increased as more students got their own cell phones and started using them for texting. This is an example of positive network externality because the value of the network increased as more users joined it. Additionally, this led to a snowball effect where more students got cell phones, which further increased the value of the network.

In a Class of 10 Students,two of the Students Owned