Question

In the context of policy coordination,state the two forms in which externalities might result

Answer 1

Answer:

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Answer 2

The two forms in which externalities might result due to the context of policy coordination are positive externalite where the activities have a positive affect and the negative externalities are where  economic activities  have a negative effect.

Explanation:

• The concept of externality arises from the production or consumption of a good or service that has a direct impact on the third party and it results in an advantage for the  party.
• Pollution is an effective example of negative externalities which is caused by the manufacturing industries due to the production of goods.  The pollution has a negative impact on the people living around the industry.
• There can be market failure which could be due to the cause of an  economic activity or the externalities. This happens since the price equilibrium for a product or service is not able to show the right advantage and costs for them.

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