Goods that are subject to network externalities tend to be ones:
A)for which the value of the good to an individual is lower when more people use it.
B)that are land-intensive.
C)for which the value of the good to an individual is higher when more people use it.
D)for which one person owning the good enhances its value because it's the only one.

Question

Quizplus · Accepted Answer

Goods that are subject to network externalities are ones where the value of the good to an individual increases as more people use it. This is because the utility or benefit of the good is tied to the size of the network of users. Examples of goods subject to network externalities include telephones, social networking sites, and fax machines. A is incorrect because the value of the good increases with more users. B is incorrect because land-intensive goods rely on the availability of physical space rather than network effects. D is incorrect because network externalities require a network of users, so a good that is owned by only one person would not exhibit network effects.

Goods That Are Subject to Network Externalities Tend to Be