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Royal Hobson
on Nov 25, 2024

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A positive externality or spillover benefit occurs when

A) product differentiation increases the variety of products available to consumers.
B) the benefits associated with a product exceed those accruing to people who consume it.
C) a firm does not bear all of the costs of producing a good or service.
D) firms earn positive economic profits.

Positive Externality

A benefit obtained without compensation by third parties from the production or consumption of sellers or buyers. Example: A beekeeper benefits when a neighboring farmer plants clover. Also known as an external benefit or a spillover benefit.

Spillover Benefit

A positive effect experienced by bystanders or other parties not directly involved in the production or consumption of a good or service.

External Costs

Costs incurred by a third party as a result of an economic transaction that are not reflected in the transaction's price.

  • Differentiate the impacts of positive and negative externalities on the welfare of society.
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TN
Ton’Najia NelmsNov 29, 2024
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