-The Existence of Network Externalities Implies That

question 76

Multiple Choice

-The existence of network externalities implies that:

• A)the value of a network falls as the number of members rises.
• B)​the opportunity cost of switching networks is higher for larger networks.
• C)​smaller networks are more successful than larger ones.
• D)​newer networks are more likely to become locked in.
• E)​only the most efficient and superior technology prevails in the market.

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Definitions:

External Benefit

A benefit that people other than the consumer or producer enjoy, resulting from a transaction or activity.

Economic Efficiency

A condition in which all available resources are utilized in the most effective manner to satisfy society's needs and wants, minimizing waste and maximizing value.

Market Price

The current market value at which an asset or service is up for sale or purchase.

External Benefits

Positive effects experienced by those not directly involved in an economic transaction.