Identify a True Statement About Network Effects

Multiple Choice

Identify a true statement about network effects.

A) It makes it easier for new entrants to steal business from incumbent firms.
B) It decreases the switching costs for customers, making it easier for them to choose between different brands.
C) It is the growth in demand for a firm's product that results from a growth in the number of existing customers.
D) It is the cumulative effect produced when one firm enters an industry and makes a profit which triggers other firms to enter the same industry.