ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The uncompensated impact of one person’s actions on the well-being of a bystander.
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An uncompensated cost that an individual or firm imposes on others.
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A benefit that an individual or firm confers on others without receiving compensation.
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None of the above
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Detailed explanation-1: -external benefit (positive externality) External benefit (or positive externality) is a benefit that an individual or firm confers on others without receiving compensation. Ex: when you get a flu shot, you are less likely to pass on the fly virus to roommates.
Detailed explanation-2: -An external benefit is a benefit that an individual or firm confers on others without receiving compensation. External costs and benefits are known as externalities.
Detailed explanation-3: -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-4: -An external benefit is a benefit received by people other than the consumers or producers trading in the market. In other words, an external benefit is a benefit to bystanders.
Detailed explanation-5: -In economics, there are four different types of externalities: positive consumption and positive production, and negative consumption and negative production externalities. As implied by their names, positive externalities generally have a positive effect, while negative ones have the opposite impact.