Identify two activities that generate positive externalities and two activities that generate negative externalities. Be sure to explain why each activity you identified generates the type of externality you stated.
What will be an ideal response?
A positive externality occurs when benefits are granted to some third-party who is not directly involved in the market exchange. Examples include innoculations (which help to prevent the spread of contagious disease) and education (since society benefits from having better educated individuals). A negative externality occurs when costs are incurred by some third-party who is not directly involved in the market exchange. Examples would include noise generated by a very loud stereo (since neighbors would be negatively impacted) and any polluting activity.
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A) the non-monetary opportunity cost of using the firm's own resources. B) the deferred cost of production. C) total cost minus fixed costs. D) accounting profit minus explicit cost.
The marginal product of labor curve can be shifted to the right by
a. improved technology b. additional physical capital c. improved human capital d. all of the above e. none of the above
A belief that demand shocks are an important source of business cycle fluctuations implies a preference of ________
A) the new Keynesian model over the traditional Keynesian model B) the real business cycle model over the traditional Keynesian model C) the real business cycle model over the new Keynesian model D) the new Keynesian model over the real business cycle model
The primary source of revenue for local governments is _____
a. income taxation b. sales taxation c. estate taxation d. property taxation