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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.
Suppose that the following equation characterizes the demand for primary education in a developing country X: Q = 100 – 2P Where Q is quantity demanded in years of schooling and
Hi I need help with elasticity. I think the problem has already been posted to your site.
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