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  • A negative externality (sometimes referred to as an "external cost") exists when an economic actor produces an economic cost but does not fully pay that cost. A well-known example is the manufacturing firm that dumpspollutants in a river, decreasing water quality downstream.
  • A positive externality (sometimes referred to as an "external benefit") exists when an economic actor produces an economic benefit but does not reap the full reward from that benefit. Positive externalities are less well-known, but can be vitally important to individual and societal well-being. A landowner, for example, by choosing not to develop her land might preserve awater recharge source for an aquifer shared by the entire local community. Other examples are parents who, out of love for their children, raise them to become decent people (rather than violent criminals). In so doing they also create benefits for society at large. Similarly, when one person gets vaccinated against a communicable disease, she not only protects herself, but also others around her, from the disease's spread. In both cases there are social benefits from individual actions: Well-educated, productive citizens are an asset to the community as well as to their own families; and disease control reduces risks for everyone.
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How do externalities impact the determination of the socially optimal quantity in a market?

Externalities can affect the socially optimal quantity in a market by causing a divergence between private costs and social costs. When externalities are present, the market may produce more or less than the socially optimal quantity, leading to inefficiency. This can result in overproduction or underproduction of goods and services, which can have negative impacts on society as a whole.


What is the economic term for the indirect effects of markets that are not corrected within the markets?

Externalities. A more proper definition for an externality is a transaction between two economic agents which affects a third, non-participating agent. Whether or not externalities are corrected for in a market is a matter of debate in economic theory.


What is the difference between internal and external environments?

internal environment includes things, situations and events that occur in the organization which effect the business in a positive or negative way. external environment includes things, situations and events that occur outside the organization, basically not in control by the organization,but effect the organization in a positive or negative way.


What is the relationship between Pareto efficiency and externalities in economic theory?

In economic theory, Pareto efficiency refers to a situation where resources are allocated in the most efficient way possible, maximizing overall societal welfare. Externalities are costs or benefits that affect parties not directly involved in a transaction. The relationship between Pareto efficiency and externalities is that externalities can lead to market inefficiencies and prevent the achievement of Pareto efficiency. This is because externalities can result in a misallocation of resources and a failure to account for the full costs or benefits of a transaction, leading to a suboptimal outcome for society as a whole.


What are some ways externalities can be solved without government intervention?

Externalities can be addressed through private negotiation between affected parties, often referred to as the Coase Theorem, where they can reach mutually beneficial agreements. Additionally, establishing property rights can help define ownership and incentivize parties to negotiate solutions that mitigate negative externalities. Community-based initiatives, such as social norms and local agreements, can also facilitate cooperation among individuals to address externalities collaboratively. Lastly, market-based solutions like tradable permits can allow for flexible and efficient allocation of resources to reduce external impacts.

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What are the Difference between positive and negative development?

one is positive, the other is negative


What is the difference between a negative and a positive?

positive ions carry positive charge and negative ions carry negative charge


What are difference between negative and positive signs?

Positive looks like this + Negative looks like this -


What is the difference between negative and positive?

Each of them is the negative of the other one.


What is the difference between positve and negative correlation?

Positive correlation has a positive slope and negative correlation has a negative slope.


What is the difference between positive and negative comparator?

positive yhe porlar


Is the difference of a positive integer and a negative integer always positive?

The difference between any numbers is always positive.


What is negative shear and Positive shear?

The difference between a positive shear and a negative shear is the direction the image is distorted into


Difference between negative and positive acceration?

Positive acceleration ==> speeding up Negative acceleration ==> slowing down


It has a potential difference between the positive and negative terminals?

It is a battery.


How do you find difference a negative number and a positive number?

to find the difference between a negative number and a positive number, you do the same thing as you would do for a positive and positive number. You just subtract the smaller number (which would of course be the negative) from the larger number (the positive). example: difference between 7 and -4 7 - (-4) = 11