What is a positive externality? Give an example of one. Explain why your example is an externality. How does society (via government action) deal with positive externalities?
Positive externality is a situation where the economic activity between two people will benefit the third person as well. for example, a vaccination drive near the locality will benefit the whole community not just the people getting vaccinated.
It is an externality because a vaccination drive will make the whole society healthy, not just the people getting vaccinated, it will increase the labor force efficiency and boost economic activity.
positive externality goods are always short supplied in the market due to the externality, to deal with this the government will subsidize this particular activity and increase it.
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