Question

[10pts] What is an externality?  Give an example (other than those given in other questions) of a...

  1. [10pts] What is an externality?  Give an example (other than those given in other questions) of a positive and negative externality.  Be sure to discuss why they are positive and negative externalities.  

Homework Answers

Answer #1

An externality means a cost or benefits caused by producer that is not financially incurred or received by that producer.it may be positive or negative.

Positive externalities means actions that reduces transmission of disease or avoids the use of lawn treatment that runoff to rivers and thud contribute to excess plant growth in lakes

While negative externalities are those which caused pollution that diminishes the property values or health of people in the surrounding area.

Research and development conduct by company is a positive externalities

While pollution caused by firm is example of negative externalities

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