Question

Network effects areA) increases in demand resulting from products being mentioned positively in a television program.B) increases in the value of a product to each user, including existing users, as the total number of users rises.C) the change in real GDP resulting from a change in investment or government spending. D) reductions in per-unit production cost as firms learn by doing.

Answer 1

Answer:

B) increases in the value of a product to each user, including existing users, as the total number of users rises.

Explanation:

A network effect happens when a product or service gains value because more people are consuming or using it.

The perfect example of network effects are social networks, the larger the quantity of people using them, the more valuable they become for both new and existing users.