What are externalities? Give an example …
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Sia ? 4 years, 6 months ago
An externality is said to occur when the actions of one entity bears an impact on other entities. These externalities can be positive as well as negative. A positive exeternality is when the action of one person positively affects the others. For instance, plantation by a person fresh air to the neighbours.
Also it contributes to the environment and at the same time, increases the welfare of the neighbours.
Thus plantation by a person affects the life of the people living in the surrounding areas; it enhances the overall welfare of the society and positive exeternality
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