Business and Environmental Impact Quiz

Business decisions and actions can have significant effects on its stakeholders. These effects are termed ‘externalities’. Externalities can be categorized into six groups given below and we’ll take examples from a scenario where a business builds a new production factory. Private Costs: costs paid for by the business for an activity. Examples: costs of building the factory, hiring extra employees, purchasing new machinery, running a production unit etc. Private Benefits: gains for the business resulting from an activity. Example: the extra money made from the sale of the produced goods etc. External Costs: costs paid for by the rest of the society (other than the business) as a result of the business’ activity. Examples: machinery noise, air pollution that leads to health problems among near residents, loss of land (it could have been a farm land before) etc. External Benefits: gains enjoyed by the rest of the society as a result of a business activity.