Network externalities
A)can only exist when there are economies of scale.
B)prevent the dominance of a market by one firm.
C)exist when the usefulness of a product increases with the number of consumers who use it.
D)are created when celebrity endorsements of products lead to a surge in the demand for those products.

Question

Quizplus · Accepted Answer

Network externalities exist when a product becomes more valuable to existing and potential consumers as more people use it. This can result in a feedback loop where more people start using the product because it is popular, which makes it even more valuable to others. This phenomenon is often seen in industries such as technology, where the value of a product or service is often linked to the size of the user base. Network externalities can occur with or without economies of scale, and they do not necessarily prevent the dominance of a market by one firm. Celebrity endorsements may create a temporary surge in demand, but this is not necessarily the same thing as a network externality.

Network Externalities