Externalities Flashcards
What is a negative externality?
A bad side effect of an activity.
What is a positive externality?
A good side effect of an activity.
What is an example of a negative externality?
Air pollution from factories, noise pollution.
What is an example of a positive externality?
Education, Healthcare, vaccination
What are external benefits?
A positive effect to a third party from the production or consumption of a good.
Examples of external benefits of education?
Less crime and poverty, environmental benefits.
What are social costs?
Total costs to society.
What are private costs?
Paid directly by the producer or consumer.
What are external costs?
Negative externalities.
What are social benefits?
Total benefit to society.
What are private benefits?
The direct benefit to the consumer.
What are external benefits?
Positive externalities.
