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NETWORK EXTERNALITIES
Till this point we have assumed that people's demands for good are independent of each other.
Actually, a person's demand can be affected by the number of other people who have purchased that good.
If this is the case, a network exists externality.
Network externalities can be negative or positive.
A positive network exists externality if the quantity of a good demanded by a consumer increases in response to an increase in the purchases by other consumers.
Negative network externalities are the opposite of it.
Cost in the Long Run Cost minimization with the Varying Output Levels -A firm's expansion path shows minimum cost combinations of labor and capital at each level of output.
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