Concept explainers
What is externality and examples of positive and negative externality.
Explanation of Solution
An externality can be beneficial or cost which means it may be positive or negative externality. The impact of one’s action on the well-being of another is termed as an externality. The classic example of an externality is pollution. The production of goods emits pollutants in the environment which leads to different kinds of pollution like air pollution and water pollution. and so forth. This causes health problems for the people who are living near the production area. The example of a positive externality is restoration of historical buildings, facts which are leading to the formation of new research and education experiments and so on.
Concept Introduction:
Externality: Externality is the impact of one person's actions on the well-being of a bystander. The externality is two types, positive and negative.
Positive externality: If the impact of one person’s action on the bystander is beneficial, it is known as a positive externality
Negative externality: If the impact of one person’s action on the bystander is adverse, it is known as a negative externality.
Want to see more full solutions like this?
Chapter 5 Solutions
Microeconomics (6th Edition)
- If there are no externalities or market power and all markets are in equilibrium, what conclusions can we draw from this in economic theory?arrow_forwardFrom CNN what news article represents an issue ragards to Externalities or that can be realted to externalities? Cite at least one source (News Article, Video, etc.) for any data. Explain: What is the Economic issue? (Describe the issue) What is the connection to Externalities? (positive, negative, policy) (Use Math, Graph or data to explain or support your idea) Explain how this affects the Economy (individual, industry, national or global)arrow_forwardDefine externalities. Also give an example of a negative externalityarrow_forward
- What is meant by "internalizing" an externality? How can a negative externality be internalized?arrow_forwardWhat is a negative externality? What is an example of a negative externality? What is a solution for dealing with a negative externality?arrow_forwardExplain the difference between a positive externality and a negative externality. Can both types of externalities result in market failure? Why or why not?arrow_forward
- Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage LearningEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
- Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningMacroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningMicroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning