SSC
GENERAL ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a way to generate trade that will benefit people who are from other countries
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an economic side effect that generates unexpected benefits
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a cash flow that will benefit both the government and the businesses who interact with it
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an extra payment to welfare recipients
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Detailed explanation-1: -A positive externality is when an individual’s consumption in a market increases the well-being of others, but the individual does not charge the third party for the benefit. The third party is essentially getting a free product.
Detailed explanation-2: -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-3: -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-4: -A positive production externality (also called “external benefit” or “external economy” or “beneficial externality") is the positive effect an activity imposes on an unrelated third party. Similar to a negative externality. Going back to the example of the farmer who keeps the bees for their honey.