Asked by AIDAN ECCLESTON on Jun 03, 2024
Verified
Part of the reason for the success of Facebook is:
A) a strong positive network externality.
B) a strong negative network externality.
C) the avoidance of a positive externality.
D) the avoidance of a negative externality.
Network Externality
A situation where the value of a product or service increases for a user when more people use it.
A social networking platform that allows users to create profiles, share photos and videos, send messages, and keep in touch with friends, family, and colleagues.
Positive Externality
A benefit that affects a party who did not choose to incur that benefit, often associated with public goods or services.
- Understand the essence and outcomes of network externalities on market behavior and consumer decision-making.
Verified Answer
TW
Teelyly WangchiaxaJun 05, 2024
Final Answer :
A
Explanation :
A strong positive network externality occurs when the value of a good or service increases as more people use it. In the case of Facebook, the more people that joined, the more valuable it became for existing users. This created a self-reinforcing cycle of growth, leading to the success of the platform.
Learning Objectives
- Understand the essence and outcomes of network externalities on market behavior and consumer decision-making.