What Is a Network Externality

question 193

Multiple Choice

What is a network externality?

• A)It refers to having a network of suppliers and buyers for a good or service.
• B)It refers to lobbying to form a public enterprise.
• C)It refers to a situation in which a product's usefulness increases with the number of people using it.
• D)It refers to a product that requires connection to a network for it to be useful.

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Definitions:

Consumer Surplus

The difference in the total funds consumers are willing and able to disburse for a good or service compared to the actual expenditure.

Willingness to Pay

The maximum amount an individual is prepared to spend on a good or service to satisfy their needs or desires.

Camera

A device that records or captures images, which can be stored, viewed directly, or transmitted to another location.

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually do pay.