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Chapter 12: Problem 15

Give an example of a positive externality and an example of a negative externality.

Short Answer

Expert verified
A positive externality example is vaccination, which not only protects the vaccinated person but also reduces disease spread, benefiting the community. A negative externality example is pollution from a factory that harms the ecosystem and affects people living nearby, imposing costs on them.

Step by step solution

01

Positive Externality Example

A common example of a positive externality is vaccination. When a person gets vaccinated, they not only protect themselves from illness but also protect the community by reducing the spread of disease. The individuals in the community who don't get sick due to other people's vaccination benefits from this positive externality.
02

Negative Externality Example

A common example of a negative externality is pollution from a factory. If a factory pollutes a river nearby, it may cause harm to the local ecosystem and the people living downstream who depend on the river for drinking water and other resources. In this case, the factory's action imposes costs on others, leading to a negative externality.

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Most popular questions from this chapter

As the extent of environmental protection expands, would you expect the marginal benefits of environmental protection to rise or fall? Why or why not?

What does a point inside the production possibility frontier represent?

A city currently emits 16 million gallons (MG) of raw sewage into a lake that is beside the city. Table 12.13 shows the total costs (TC) in thousands of dollars of cleaning up the sewage to different levels, together with the total benefits (TB) of doing so. Benefits include environmental, recreational, health, and industrial benefits. a. Using the information in Table 12.13 calculate the marginal costs and marginal benefits of reducing sewage emissions for this city. b. What is the optimal level of sewage for this city? How can you tell?

Identify the following situations as an example of a negative or a positive externality: a. You are a birder (bird watcher), and your neighbor has put up several birdhouses in the yard as well as planting trees and flowers that attract birds. b. Your neighbor paints his house a hideous color. c. Investments in private education raise your country's standard of living. d. Trash dumped upstream flows downstream right past your home. e. Your roommate is a smoker, but you are a nonsmoker.

What is the difference between private costs and social costs?
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