Economics Externalities Questions
Positive externalities refer to the benefits or positive effects that are experienced by individuals or society as a whole, resulting from the actions or production of goods or services by others. These externalities are not accounted for in the market price and can lead to underproduction or underconsumption of the good or service. Examples of positive externalities include education, vaccinations, and research and development.
On the other hand, negative externalities are the costs or negative effects that are imposed on individuals or society as a result of the actions or production of goods or services by others. These externalities are also not reflected in the market price and can lead to overproduction or overconsumption of the good or service. Examples of negative externalities include pollution, noise pollution, and congestion.