ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Pollution as a negative externality. Pollution is a negative externality. Economists illustrate the social costs of production with a demand and supply diagram. The social costs include the private costs of production incurred by the company and the external costs of pollution that are passed on to society.

Detailed explanation-2: -A negative externality exists when the production or consumption of a product results in a cost to a third party. Air and noise pollution are commonly cited examples of negative externalities.

Detailed explanation-3: -Negative and positive externalities In the case of pollution-the traditional example of a negative externality-a polluter makes decisions based only on the direct cost of and profit opportunity from production and does not consider the indirect costs to those harmed by the pollution.

Detailed explanation-4: -Pollution is an example of a negative externality. Externalities that provide a benefit to others are “positive externalities.” Education, for example, generates positive externalities. Not all goods and services come with externalities, but many do-and some that do might be a surprise.

Detailed explanation-5: -A negative externality occurs when the impact of the bystander is adverse and a positive externality when it is beneficial. Air pollution is essentially a negative externality: it imposes external costs to people who are external to the transaction of a polluting product.