EBK ECONOMICS
4th Edition
ISBN: 8220101443649
Author: KRUGMAN
Publisher: YUZU
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Chapter 16, Problem 2BCQ
To determine
Concept Introduction:
Externalities: Any external factor which causes either a benefit or loss to the producers and these benefits or losses do not get reflected in the market price of a good or service and not even reflected in the accounts of a producer, then this is known as externalities. It may be a loss for one party and gain for the other.
The positive externality can be said as an external benefit, whereas the negative externality can be said as an external cost.
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