Which statement describes the normal pricing pattern for a network good?
A) Due to high fixed costs, the price starts high and then drops steadily as sales increase.
B) Price starts low and then steadily rises as sales increase.
C) Price starts low, rises, and then eventually falls as the market becomes saturated.
D) There is a negative relationship between price and quantity demanded at all price levels.

Question

Quizplus · Accepted Answer

Network goods often start with low prices to build a user base, then prices may rise as the network effect increases demand, and eventually, prices may fall as the market becomes saturated and competition increases.

Which Statement Describes the Normal Pricing Pattern for a Network