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Question : 17
Total: 19
Discuss briefly the concept of 'Externalities', with suitable example.
Solution:
Externalities: It refers to the good or bad impact of an activity without paying any price or penalty for that.
1. Positive Externality: Good impact on third party without paying price is positive externality. Fore.g. Construction of a flyover reduces journey time, beautiful park in front of your house, etc.
2. Negative Externality: Bad impact on third party without his/ her own fault. For E.g. Contaminated water from factories, Smoke emission from chimneys of factories, etc.
1. Positive Externality: Good impact on third party without paying price is positive externality. Fore.g. Construction of a flyover reduces journey time, beautiful park in front of your house, etc.
2. Negative Externality: Bad impact on third party without his/ her own fault. For E.g. Contaminated water from factories, Smoke emission from chimneys of factories, etc.
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