Question

A ________ externality exists when the number of customers who purchase a good or use it influences the quantity demanded.

Answer 1

Answer: network

Explanation:

Network externality simply states that demand for a good or service has to do with how other people demand for that particular good or service. It means consumer's buying patterns are influenced by the purchase of others buying the product.

Therefore, a network externality exists when the number of customers who purchase a good or use it influences the quantity demanded.