Facebook, the world's most visited Web site as of June 2011, has millions of users. The large membership base of Facebook would mean that a user is likely to find most of his friends when he logs in to Facebook. Lack of this competence prevents new players from penetrating Facebook's market. This is an example of ________.
A) monopolistic competition
B) internal marketing
C) network effects
D) guerilla marketing

Question

Quizplus · Accepted Answer

The situation described is an example of network effects, where the value of a product or service increases as more people use it. In this case, Facebook's large user base adds value to the site because it increases the chances of a user finding their friends on the site. This makes it harder for new competitors to enter the market and attract users away from Facebook.

Facebook, the World's Most Visited Web Site as of June