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7 Cards in this Set
- Front
- Back
an unintended effect on an activity on a bystander
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externality
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Driving a car generates negative externalities. Why?
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Pollution
Car Accidents Congestion (the more cars on the road) |
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Getting college education generates positive externalities. Why?
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Offer new ideas
More skills Reduces the probability of becoming a criminal Saves cost to others |
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Most bees collect nectar, which they then convert into honey. As nectar is collected, fruit flowers are pollinated. Do bees generate positive externalities to fruit farmers? Explain.
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Yes, unintentional, doing it for themselves but it benefits the farmers too
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When the exploration rover Spirit reached Mars, it caused several types of pollution (in the atmosphere, the soil, and eventually the rover will likely be abandoned, so all it will be is garbage on Mars). Is the pollution created by the rover a negative externality in the strict sense of the word? Explain.
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No, because it does not effect anybody or anything
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As Jane works hard in a local grocery store, she gets paid and can feed her children. Is the benefit that the children get from Jane's work an externality? Explain.
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No, because it is intentional
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negative externalities imply that there will be too MUCH of the activity that causes the externality in a free market
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inefficient production/consumption
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