How Do Network Effects Benefit Established Businesses

question 46

Multiple Choice

How do network effects benefit established businesses?

• A) It allows consumers to find a variety of goods and services in one place.
• B) Transportation costs are decreased, and the concentration of many people and firms in a particular area leads to greater innovation by existing firms and new ones.
• C) It doesn't benefit established businesses.
• D) It allows the established business to learn about its competitors, thus allowing it to lower prices and compete more effectively.

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Definitions:

Set Point

A normal condition maintained by homeostatic mechanisms.

Steady State

A condition where the variables (such as concentration of substances) in a system remain constant over time despite ongoing processes that attempt to change them.

Homeostatic Response

The process by which organisms regulate internal conditions, such as temperature and pH, to maintain a stable internal environment.

Set Point

The target value that a system regulates towards, such as the human body's regulation of temperature or glucose levels.