SSC
GENERAL ECONOMICS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume.
|
|
|
the total cost to society of producing an additional unit of a good or service.
|
|
|
the amount a consumer pays to consume an additional amount of any particular good.
|
|
|
a situation in which the market, on its own, does not distribute resources efficiently.
|
Detailed explanation-1: -So, externalities occur when some of the costs or benefits of a transaction fall on someone other than the producer or the consumer. Imagine there’s a factory in your town that produces widgets, a good that benefits consumers all over the world. The smokestacks at the factory, however, belch out pollution 24/7.
Detailed explanation-2: -Externalities occur in an economy when the production or consumption of a specific good or service impacts a third party that is not directly related to the production or consumption of that good or service.
Detailed explanation-3: -In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party’s (or parties’) activity. Externalities can be considered as unpriced goods involved in either consumer or producer market transactions.
Detailed explanation-4: -An externality stems from the production or consumption of a good or service, resulting in a cost or benefit to an unrelated third party. Equilibrium is the ideal balance between buyers’ benefits and producers’ costs, while market failure is the inefficient distribution of goods and services in the market.