Question

A. Define a positive externality. B. What problem does the provision of a good/service with a...

A. Define a positive externality.

B. What problem does the provision of a good/service with a positive externality pose for free markets? Use a graph to strengthen your answer.

C. Give two examples of positive externalities and explain how they work.

D. How does government encourage solutions to positive externalities?List all three policy choice given in the textbook.

Please use text it's easier to understand.

Business   Economics   
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Homework Answers

Answer #1

A. A positive externality is a benefit that is enjoyed by the third party as a result of the economic transaction.

B. A positive externality like providing education facility to all residents. The government should make sure that each citizen is provided with proper education. In case of the free market, if the schools are not filled up with good teachers or good infrastructure, these can cause a problem of positive externalities.

C. i - Health facility.

ii - Education Facility

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