A situation where a consumer's willingness to use an item depends on how many others use it is: a

Economics Dec 23, 2020

A situation where a consumer's willingness to use an item depends on how many others use it is:

a. a positive-sum game,

b. a network effect,

c. price-leadership,

d. a vertical merger.

Expert Solution

The correct option is (b). A network effect.

In business management and economics, a network effect is associated with the effect that an additional user has on the value of that product to others. Generally, when there is a network effect then as the value of the product/service rises when the number of customers using it rises.

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