ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Term. An external benefit is a benefit not included in the market price of the goods and services being produced, i.e. a benefit not paid by those who receive it.

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: -Drunk drivers, cell phones ringing in movie theaters, loud automobiles, polluted air, and rivers polluted to the point that they catch fire, like Cleveland’s Cuyahoga did, are all examples where a transaction between two parties harmed other people. These are “external effects.”

Detailed explanation-4: -Positive externalities of production is when the simple production of a good or service leads to a benefit that provides for either a society as a whole, an individual or another business or government entity.