Externalities Flashcards
1
Q
Define externalities
A
Cost or benefit to a third party who’s not directly involved in a economic activity + transaction
2
Q
Negative externality
A
When there is a cost to the third party
3
Q
positive externality
A
When there was a a benefit to a third party
4
Q
Name the positive and negative externalities of fireworks
A
Positive
It’s free
Negative
Makes loud noises could disturb those nearby
5
Q
FMQ
A
Private optimum
6
Q
SOQ
A
Social optimum
