Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 10 - Part IV - Externalities - Questions for Review - Page 212: 1

Answer

An example of a positive externality is the benefit to health of others after an individual gets a vaccination.An example of a negative externality is pollution from coal burning power stations.

Work Step by Step

An externality is a benefit or cost that accrues to a third party outside of a market exchange. A vaccination generates extra health benefits for others who come into contact with a vaccinated person. Pollution is a negative externality because it creates costs (health and climate change) for the environment and people beyond sellers and purchases of coal-generated power.
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