Which of the following best reflects a network externality?
a. Price of a good affecting a purchase decision
b. Number of other people purchasing the good influencing the quantity demanded.
c. Proven quality of a product influencing the quantity demanded.
d. Price of a related good affecting a purchase decision.
b
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Assume that the economy has two sectors, milk and orange juice, and that both sectors are initially in long-run competitive equilibrium. Milk and orange juice are substitute goods
Trace the effects of a change in preferences that increases the demand for orange juice.
Grocery store chains advertise more than convenience stores because:
A) the advertising elasticity of demand is smaller for grocery store chains than for convenience stores. B) convenience stores have more elastic demand for their products than grocery store chains. C) the advertising elasticity of demand for convenience stores is near zero and is much smaller than for grocery store chains. D) all of the above E) none of the above