A ________ externality exists when the number of customers who purchase a good or use it influences the quantity demanded.
A) network
B) production
C) consumption
D) distribution
E) regulation

Question

Quizplus · Accepted Answer

A network externality exists when a greater number of customers using or buying a product leads to an increase in demand for the same product. This is because the value of the product increases as more people use it, making it more attractive to potential customers. Examples of products with network externalities include social media platforms and messaging apps.

A ________ Externality Exists When the Number of Customers Who