Question content area

Part $1$

To have a$$ monopoly, barriers to entering the market must be so high that no other firms can enter. Do network externalites create or remove barriers to$$ entry? Explain.

Part $2$

Network externalities

Part $3$

A$.$

create barriers to entry because if a firm can attract enough customers$$ initially, it can attract additional customers as its$$ product's value increases by more people using$$ it$,$ which attracts even more customers.

B$.$

remove

barriers to entry because

diseconomies

of scale are so large that one firm can supply the entire market at

higher

average total cost than can two or more firms.

C$.$

remove

barriers to entry because consumption of a$$ firm's product

increases

the value of goods and services produced by other firms.

D$.$

remove barriers to entry because such externalities require multiple firms to provide the goods and services in the network.

E$.$

create barriers to entry because a firm efficiently offers products that satisfy consumer preferences.