Why Does Network Externality Arise

question 59

Multiple Choice

Why does network externality arise?

• A)Each additional unit of a good sold reduces the value of the previously sold units.
• B)As more and more units of a good are produced,the average cost declines.
• C)Consumption of a good by one user does not affect the consumption of subsequent users.
• D)The firms enjoy economies of scale in the long run.
• E)Each additional unit of the good sold increases the value of the previously sold units.

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Definitions:

Potential Revenue Stream

Future income that could be generated from a business activity or investment, not yet realized.

Operational CRM

Customer relationship management focused on the direct interactions with customers, aiming to enhance customer service, sales, and marketing operations.

Back-Office

Refers to the administrative and support personnel in a company who are not client-facing, involved with functions such as accounting, IT, and human resources.

Customer Acquisition

The process of bringing new customers to a business through various marketing and outreach strategies.