A network externality can be said to exist when:
A)a recording artist appears on a popular TV show leading to an increase in popularity and record sales; this is called the "snob effect".
B)a recording artist appears on a popular TV show leading to an increase in popularity and record sales; this is called the "bandwagon effect".
C)many people try to access the internet at the same time leading to a system crash.
D)two television networks decide to merge.

Question

Quizplus · Accepted Answer

Network externalities occur when the value of a product or service increases for other users as more people use it. Choice B describes the "bandwagon effect," which is a type of network externality where the popularity and value of a product increase as more people adopt it, such as a recording artist becoming more popular as more people are exposed to their music.

A Network Externality Can Be Said to Exist When