MF- Positive Externalities Flashcards
1
Q
Positive externalities occur when
A
Production and/or consumption creates external benefits in third parties outside the market
2
Q
External benefits may be in the form of:
A
- lower costs for other parties
- increased revenues for others
- increased utility/satisfaction for others
3
Q
Positive externalities are associated with
A
Merit goods and services
4
Q
Examples of positive production externalities will
A
- flood defences
- projects to reduce deforestation
- promotion of sharing of scarce resources such as cars
- research and development
- bee keeping and pollination
5
Q
Examples of positive consumption externalities
A
- healthcare/ childcare
- education
- pest control
- mass transport services
- youth clubs and apprenticeships
6
Q
Where positive externalities exit
A
The good or services may be under consumed or over provided since the free market may fail to value them correctly or take them into account when pricing the product
7
Q
If there are external benefits..
A
The market delivers an output below the quantity that maximises social welfare
8
Q
External benefits from libraries
A
- community hub
- free access to knowledge
- increased labour mobility
- positive spillovers from free facilities for people to study, work and meet
- people in poorer communities more likely to visit and use libraries
9
Q
Factors behind declining usage of libraries
A
- cuts in local authority funding
- cheaper book prices online
- rise of e-books
- growth of internet access- people using the web for their own research
