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There are plenty of examples of economic activities that can generate positive externalities:
Industrial training by firms: This can reduce the costs faced by other firms and has important effects on labour productivity. A faster growth of productivity allows more output to be produced from a given amount of resources and helps improve living standards throughout the economy. See the revision notes on the production possibility frontier
Research into new technologies which can then be disseminated for use by other producers. These technology spill-over effects help to reduce the costs of other producers and cost savings might be passed onto consumers through lower prices
Education: A well educated labour force can increase efficiency and produce other important social benefits. Increasingly policy-makers are coming to realise the increased returns that might be exploited from investment in human capital at all ages.
Health provision: Improved health provision and health care reduces absenteeism and creates a better quality of life and higher living standards.
Employment creation by new small firms
Flood protection system and spending on improved fire protection in schools and public arenas
Arts and sporting participation and enjoyment derived from historic buildings"
Taken from http://tutor2u.net/economics/content/topics/externalities/positive_externalities.htm
Wiki User
∙ 13y ago
Wiki User
∙ 9y agoPositive externalities include governmental involvement and changes in technology. Both of these things can improve a business' position within their industry.
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Is it true or false that noise pollution from a racetrack is an example of a positive externality?
False; noise pollution form a race track is not an example of positive externality. It is more likely an example of negative externality.
Would you classify pollution as a positive or a negative externality?
Negative.
State three possible causes of market failure?
Externality - Negative Externality And Positive Externality the positive externality is a cause of a market failure because producers do not take the benefits of externality into account to society, therefore they under-produce the good that generates it , a negative externality happens where MSC > MSB. Factor Immobility And Market Power .
What is true about an externality?
It can be either positive or negative.
How does an externality affect the market outcome?
An externality is an effect of a decision on a third party not taken into account by the decision maker. One example that comes to mind is a new business opening in an area. The decision of where to place a new Wal-Mart is an important decision for the company. But in the course of making that decision, they will not consider every alternative. For example, some of the other businesses in the area may experience larger sales because Wal-Mart will bring more people to the area. An externality can be positive or negative. A negative externality is negative when the decision is detrimental to those outside the decision. A positive externality occurs when the effect of a decision is beneficial to others outside the decision.
An example of an externality is the impact of?
Externality refers to the action of a person on a bystander's well-being. A simple example of eternality is the effect of our actions to a bystander.
What is a positive externality?
an economic side effect that generates unexpected benefits
State one government policy measures that can be used to internalise a positive externality of production?
One government policy measure that can be used to internalise a positive externality of production is state intervention in trade activities.
What is it when third parties reap the benefit of a good or service for which they did not pay?
Positive externality
Is a beneficial side effect that affects an uninvolved third party?
positive externality
How does an externality relate to socially optimal quantity?
In the presence of an externality (positive or negative), individual economic actors produce a socially inefficient amount of a good (since they do not include social gains or costs in their calculations). Thus, in general, when there is a Negative externality, firms are overproducing a good with a social cost and thus the optimal equilibrium occurs at decreased production. Positive externality, firms are underproducing a good with a social benefit and thus the optimal equilibrium occurs at increased production.
Explain why government intervention is often required if there is a positive externality in the market and illustrate with a diagram Briefly list what are the ways to correct for a positive external?
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