What effect does a network externality have on the market for a product? if a network externality is present for a product, then

a. consumers may be more likely to buy the product because it is more useful.

b. consumers may be less likely to buy the product to avoid switching costs.

c. producers may be more likely to supply the product to create path dependence.

d. producers may be less likely to supply the product to avoid market failure.

e. producers may be less likely to supply the product because it is less unique?

Question

Moriah Silva

Business

23 September, 16:03

What effect does a network externality have on the market for a product? if a network externality is present for a product, then

a. consumers may be more likely to buy the product because it is more useful.

b. consumers may be less likely to buy the product to avoid switching costs.

c. producers may be more likely to supply the product to create path dependence.

d. producers may be less likely to supply the product to avoid market failure.

e. producers may be less likely to supply the product because it is less unique?

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Answers (1)

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Johnny · Answer 1

The term network externality is used in economics to describe a situation in which the usefulness of a product increases with the number of consumers who use it. It is the change in the benefit, derived from a good when the number of other agents consuming the same kind of good changes.

If a network externality is present for a product, then consumers may be more likely to buy the product because it is more useful.