(a) What is externality? What is the economic impact of an externality?
Externalities issue is important, not only involves a moral issue but also involves economic issues in terms of resource utilization and external cost impact of positive and negative such as the cost of treatment and other costs.
In economics, an externality, or transaction spillover, is a cost or benefit that is not transmitted through prices or is incurred by a party who was not involved as either a buyer or seller of the goods or services causing the cost or benefit.
| In economics, an externality is defined as a cost or a benefit stemming from a transaction that affects various third parties who are not part of the transaction.
| Define externality as cost or interest from a market transaction that not imposed any price. It refers externality occur effect to third personnamely other than seller and buyer. Cost or interest discounted inproduction (seller) or usage (buyer).
| Hyman (2002)
| Eksternaliti is activity some party (household or firm) influence utility possibility or other party production without incurred cost.
| Brodway (1979)
The implication are as follows:
* Party which produces the effect has no incentive to take if, whether the effect benefit of prejudice party influenced. * Party thet influence might be using total resources that is inefficient in conducting their activity.
Economic impact of externality
| Positive externality
| Negative externality
| Also called beneficial externality, external benefit, external economy, or Merit goods.
| Also called external cost or external diseconomy.
| External mold which brought good effect result economic activity which is being carried out by a firm.
| Extenal mold that harmful result economic activity which is being carried out by a firm.
| Similarly, if too many positive externalities fall outside the participants in a transaction,...
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