Ch 14 Externalities

Ch 14 Externalities - Externalities Chapter 14 1...

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Externalities Chapter 14 1
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Externality Externality: a cost of a benefit that arises from production and falls on someone other than the producer, OR a cost or benefit that arises from consumption and falls on someone other than the consumer. Four Types Positive Production Externality Negative Production Externality Positive Consumption Externality Negative Consumption Externality 2
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Negative Production Externalities Negative production externalities are common. Some examples are noise from aircraft and trucks, polluted rivers and lakes, the destruction of animal habitat, and air pollution in major cities from auto exhaust. Externality Types
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Positive Production Externalities Positive production externalities are less common that negative externalities. Two examples arise in honey and fruit production. By locating honeybees next to a fruit orchard, fruit production gets an external benefit from the bees, which pollinate the fruit orchards and boost fruit output; and honey production gets an external benefit from the orchards. Externality Types
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Negative Consumption Externalities Negative consumption externalities are a common part of everyday life. Smoking in a confined space poses a health
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Ch 14 Externalities - Externalities Chapter 14 1...

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