Final answer:
When network externalities are present, the value of a product increases as more people use it, which is true for telecommunications and social media networks. Distinguishing these from environmental externalities is important, as the latter can cause the supply curve to shift due to internalized external costs. In competitive markets, firms' profits tend to normalize to zero in the long run due to competition.
Step-by-step explanation:
When network externalities are present, B. The usefulness of a product increases with the number of consumers who use it. Network externalities, also referred to as network effects, occur when a product's value to a user increases as more people adopt and use the same product or service. This concept is particularly relevant in cases involving telecommunications equipment and social networks, where the platform becomes more valuable as more people use it. An example of this is a social media network, which becomes more attractive as more of your friends join since it enhances connectivity and interaction.