A Network Externality Is

question 51

Multiple Choice

A network externality is:

• A)the effect that an additional user of a good or participant in an activity has on the value of that good or activity for others.
• B)directly on an economic decision maker.
• C)indirectly on an economic decision maker.
• D)without compensation on someone other than the person who caused it.

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Definitions:

Cost Method

An accounting technique used to value inventory, usually at the lower of cost or market price, and investments in certain conditions.

Par Value Method

An accounting method used for issuing shares that assigns a nominal value (par value) to the shares, which may affect the accounting treatment of share issues.

Retiring Treasury Stock

The act of permanently removing previously bought-back shares (treasury stocks) from the market, reducing the company's available shares and total equity.