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Briefly explain what is meant by the term "externality" and how it occurs.

Briefly explain what is meant by the term "externality" and how it occurs.

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Externality is an effect of a purchase or use decision by one set of parties on others who did not have a choice and whose interests were not taken into account

Negative occurs:pollution, generated by some productive enterprise, and affecting others who had no choice and was probably not taken into account.positive occurs: Purchase a car of a certain model increases demand and thus availability for mechanics who know that kind of car, which improves the situation for others owning that model.

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