Some economists argue that Microsoft became a monopoly in the market for computer software by developing MS-DOS, an operating system used for the first IBM personal computers.The more people who used MS-DOS-based programs, the greater the usefulness of a using a computer with an MS-DOS operating system.The explanation for Microsoft's monopoly is
A)the development of new technology that other firms could not copy.
B)control of a key resource which, in this case, is the MS-DOS operating system.
C)network externalities.
D)patents Microsoft obtained when it developed the MS-DOS operating system.

Question

Quizplus · Accepted Answer

Network externalities occur when the value of a product increases as more people use it. In the case of MS-DOS, the more people who used MS-DOS-based programs, the more valuable it became for individuals and businesses to use a computer with an MS-DOS operating system. This created a self-reinforcing cycle that made it difficult for competing operating systems to gain traction, ultimately leading to Microsoft's monopoly.

Some Economists Argue That Microsoft Became a Monopoly in the Market