What do you understand by externalities?
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Externalities are the positive or negative economic impact of consuming or producing a good on a third party who isn't connected to the good, service, or transaction. In other words, they are unforeseen consequences to economic activities.
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An externality is a positive or negative consequence of an economic activity experienced by unrelated third parties. Pollution emitted by a factory that spoils the surrounding environment and affects the health of nearby residents is an example of a negative externality....
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