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Questions and Answers
What happens when a positive externality occurs?
What is the result of positive externalities in the market?
How can government intervention help increase demand for goods with positive externalities?
What is the recommended diagram for representing positive externalities of consumption?
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What is the benefit of switching from conventional to organic farming?
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Study Notes
- Positive externality occurs when the consumption or production of a good benefits a third party.
- It leads to under-consumption and market failure.
- Government intervention can be used to increase demand for goods with positive externalities.
- A subsidy can overcome market failure caused by positive externalities.
- The positive externality diagram of consumption is generally advised for simplicity.
- Positive externality can be defined as a decision by an individual that benefits others.
- Switching from conventional to organic farming can have positive externalities for society.
- The benefit of the switch to organic is not limited to the farmer himself.
- Positive externalities lead to a social benefit.
- Positive externalities can be dealt with through government policies.
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Description
Test your knowledge on positive externalities with this informative quiz! Learn about the effects of consumption and production of goods on third parties, and how government intervention can be used to overcome market failure. From subsidies to organic farming, explore various examples of positive externalities and how they can benefit society. Sharpen your understanding of this important economic concept and gain insights into potential solutions for dealing with positive externalities. Take the quiz now!
