Question

Describe 2 (TWO) advantages of both pecuniary & non-pecuniary

externalities.   

Answer 1

Externalities means effect of an agent's action to another agent outcome.

There are two types of externalities:

• PECUNIARY EXTERNALITIES
• NON PECUNIARY EXTERNALITIES

ADVANTAGES OF PECUNIARY EXTERNALITIES:

1. Research and development about the any matter will increase our own knowledge on the particular factor.
2. Maintaining a good relationship with customers, managers, coworkers and employees will lead to build a good image.

ADVANTAGES OF NON PECUNIARY EXTERNALITIES:

1. Reduce our own cost of maintenance incurred. For example: dumping of waste from the factories in the lake was reduce our own cost. But it will cost to others.
2. Increase of our own protection and taking self-care.