finsih the question please tnrolmere Add KETC-11-1 .. eCa. State Apply! My Bat D
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finsih the question please
tnrolmere Add KETC-11-1 .. eCa. State Apply! My Bat Deets int maton 3. Externalities-Definition and examples An externality arises when a firm or persan engages in an activity that affects the well-being of a third party, yet neither pays compensation for that effect. If the impact on the third party is adverse, it is called a nor recelves any externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the market equilibrium price and quantity for this good. Shift one or both of the curves to refiect you shouild shift the supply curve to reflect the social casts of producing the good: similarly, if the social value of producing the good is not equal to the private value, then you should shift the demand curve to refiect the social value af consuming the good the presence of the externality. If the social cost of producing the good is not equal to the privete cost, then Supply Demand SupplyExplanation / Answer
1. If the impact on the third party is adverse, it is called negative externality.
2. In the absence of government intervention, market equilibrium quantity produced is greater than the socially optimal quantity.
3. Following is an example of negative externality
Option A: Causing trash dropped by park visitors to pile up in your backyard.
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