A network effect generally pushing prices _____ as the network expands, and the price effect generally pushes prices _____ as the network expands.
A) lower; lower
B) higher; higher
C) lower; higher
D) higher; lower

Question

Quizplus · Accepted Answer

A network effect generally pushes prices higher as the network expands because the value of the network increases with more users. The price effect, however, generally pushes prices lower as the network expands due to economies of scale and increased competition.

A Network Effect Generally Pushing Prices _____ as the Network