Network Effect

The network effect is a principle where an increase in users enhances the quality of a product or service for everyone. This is illustrated through examples like the Internet and social media networks, where more users contribute to greater value and functionality. As more people connect and share information, the experience improves for each individual user.

What is the basic idea behind the network effect?

• A decrease in users leads to better quality.

• An increase in users leads to better quality.

• The quality decreases with more users.

• The quality remains constant regardless of users.

How does the network effect apply to the Internet?

• It loses functionality with more users.

• It becomes more valuable with more users.

• It remains the same regardless of users.

• It becomes less useful with more users.

In what way do social media networks benefit from the network effect?

• They remain unchanged regardless of user count.

• They improve the experience for everyone with more users.

• They become less engaging with more users.

• They become more expensive with more users.

What happens to the quality of a product as the number of users increases, according to the network effect?

• The quality decreases.

• The quality remains the same.

• The quality increases.

• The quality becomes unpredictable.

Which of the following best summarizes the network effect?

• More users lead to a decrease in product quality.

• More users lead to an increase in product quality.

• More users have no impact on product quality.

• More users make the product obsolete.