The correct answer is TRUE that the network externality causes firms to sacrifice profit in the short run in order to satisfy their customers and to increase long term profits.
What is network externality?
An economics concept known as network externalities discusses situations in which the value of a good or service fluctuates as its user base grows or shrinks. The traditional economic theory holds that when a product's supply grows, its price declines and its value decreases. In some cases, though, the opposite may occur, and a product or service's value may increase as its user base grows. This is referred to as the network effect or the positive network externalities.
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