4.1.8.5 Positive and Negative Externalities Flashcards
(8 cards)
Externality Definition
The costs and benefits to a third party created by economic agents when undertaking their activities.
Positive Externality
Benefits to a third party that are not included in the price of the economic activity.
Negative Externality
Costs to a third party that are not included in the price of the economic activity.
Private Costs
The costs of consuming or producing goods or services that are paid for by the one doing it.
Social Costs
The costs of consuming or producing a good that are paid for by society.
Private Benefits
The benefits of consuming or producing goods or services that are gained by the one doing it.
Social Benefits
The benefits of consuming or producing goods or services that are gained by society.
Negative Production Externality Diagram
