Question

Why is the Network Effect important in the context of computing platforms?

As a platform connects to other platforms, its maintenance gets significantly easier, and thus there is
greater likelihood of reduced costs being passed down to platform users
As more people join a platform, the economies of scale increase, and thus there is smaller likelihood of
reduced costs being passed down to platform users
As more people join a platform, the economies of scale increase, and thus there is greater likelihood of
reduced costs being passed down to platform users
As a platform connects to other platforms, its maintenance gets significantly easier, and thus there is
smaller likelihood of reduced costs being passed down to platform users

Answer 1

Step-by-step explanation:

The correct statement is:

"As more people join a platform, the economies of scale increase, and thus there is greater likelihood of reduced costs being passed down to platform users."

The Network Effect in the context of computing platforms refers to the phenomenon where the value and utility of a platform increase as more users join and use it. This increase in the number of users often leads to economies of scale, meaning that the cost per user decreases as the platform grows. When costs decrease, platform operators can potentially offer lower prices or provide more features to their users, which benefits the platform users. So, as more people join the platform and it scales, there is a greater likelihood of reduced costs and increased benefits being passed down to the platform's users.