Economics Externalities Questions
A positive production externality occurs when the production of a good or service benefits a third party or society as a whole. This means that the social benefit of producing the good exceeds the private benefit received by the producer. On the other hand, a negative production externality occurs when the production of a good or service imposes costs on a third party or society as a whole. In this case, the social cost of producing the good exceeds the private cost borne by the producer.