The impact of externalities can be:
The impact of externalities can be:
(a) Negative
(b) Positive
(c) Either (a) or (b)
(d) Neither (a) nor (b)
Anurag Pathak Changed status to publish December 14, 2023
Ans – (c)
Explanation:-
Externalities: Externalities refer to benefits or harms of an activity caused by a firm or an individual, for which they are not paid or penalised.
Externalities are either positive or negative.
Positive Externalities:-
Activities that result in benefits to others are termed as positive externalities.
Example:- Use of public parks by the people for pleasure for which no payments are made by the public. It increases welfare through positive effect on health.
Negative Externalities:
Activities that result in harm to others are termed as negative externalities.
Example:- Environmental pollution caused by industrial plants. Such pollution reduces welfare through negative effects on health.
Such external effects do not form part of market transactions. GDP does not take into account externalities, positive or negative.
Anurag Pathak Changed status to publish December 14, 2023
