ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -A negative externality is an indirect cost that a third party incurs from another party’s production or consumption of a good. Negative externalities indicate that the social costs are higher than the third parties’ private costs.

Detailed explanation-3: -A negative externality is a cost that is suffered by a third party as a consequence of an economic transaction. In a transaction, the producer and consumer are the first and second parties, and third parties include any individual, organisation, property owner, or resource that is indirectly affected.

Detailed explanation-4: -Third party and externalities A third party could be someone affected by pollution from a factory. In this case, the third party may never have wished to be involved but is forced to encounter the externality of the production.

Detailed explanation-5: -Air pollution. Air pollution may be caused by factories, which release harmful gases to the atmosphere. Water pollution. Farm animal production.