ECONOMICS
MARKET FAILURES
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Positive Externality
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Negative Externality
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Either A or B
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None of the above
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Detailed explanation-1: -A positive externality exists if the production and consumption of a good or service benefits a third party not directly involved in the market transaction. For example, education directly benefits the individual and also provides benefits to society as a whole through the provision of moreā¦
Detailed explanation-2: -One example of a positive externality is the market for education. The more education a person receives, the greater the social benefit since more educated people tend to be more enterprising, meaning they bring greater economic value to their community.
Detailed explanation-3: -Encouraging positive externalities Government grants and subsidies to producers of goods and services that generate external benefits will reduce costs of production, and encourage more supply. This is a common remedy to encourage the supply of merit goods such as healthcare, education, and social housing.
Detailed explanation-4: -Advertising. When McDonalds, Walmart, or some other big firm advertises, it solves a market failure. Education. The procurement of any form of education has the potential to benefit a third party. Insurance. Local Investment. Vaccinations / Personal Hygiene.
Detailed explanation-5: -Good architecture. Buying flowers for front garden gives benefits to others who walk past. Consuming a healthy diet ultimately will benefit others in society because less health care costs, higher productivity. Education or learning new skills. 28-Oct-2019