When a new product is introduced in the market, Lenny always wants to see how popular the item becomes before he purchases it. Lenny's behavior is known as
A) overt collusion.
B) limit-pricing.
C) a network effect.
D) price leadership.

Question

Quizplus · Accepted Answer

Lenny's behavior is indicative of a network effect, where the popularity and usage of a product among a group of people increase its value and attract more users. Lenny wants to wait and see how many people adopt the product before making a decision, indicating that the network effect is a significant factor in his purchasing behavior. The other options, such as overt collusion or limit-pricing, do not relate to Lenny's behavior of waiting to purchase a popular product.

When a New Product Is Introduced in the Market, Lenny