Which of the following are examples of situations involving a positive network externality?

A) A social network
B) The bandwagon effect
C) Toys and fads
D) All of the above

Question

Which of the following are examples of situations involving a positive network externality?A)  A social networkB)  The bandwagon effectC)  Toys and fadsD)  All of the above

Emily Eichstaedt · Accepted Answer

Final Answer : D, Explanation :  A positive network externality occurs when an increase in the number of users of a particular good or service leads to an increase in the value of the good or service for other users. A social network, such as Facebook or Twitter, exhibits a positive network externality because the more users on the platform, the more valuable it becomes to its users. The bandwagon effect is another example of a positive network externality because individuals are more likely to engage in a behavior or purchase a product if they perceive that others are doing the same. Toys and fads can also exhibit positive network externalities, as more children may desire a particular toy or product if their peers are interested in it as well.

Which of the following are examples of situations involving a positive network externality?

A) A social network
B) The bandwagon effect
C) Toys and fads
D) All of the above

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