A negative externality is a cost associated with an action that is not borne by the person who chooses to take that action. Companies that spill oil into the ocean do not bear the full costs of the resulting harm to the marine environment, which include everything from degraded commercial fisheries to reduced endangered sea turtle populations Commuters generate emissions of air pollution, which lowers the ambient quality of the air in areas they pass through and causes health problems for other people. Developers who build houses in bucolic exurban settings cause habitat fragmentation and biodiversity loss, inciting a cost on the public at large. A positive externality is a benefit associated with an action that is not borne by the person who chooses to take that action. A homeowner who installs a rain barrel to collect unchlorinated rainwater for her garden also improves stream habitat in her watershed by reducing stormwater runoff. A delivery company that reoptimizes its routing system to cut fuel costs also improves local air quality by cutting its vehicle air pollution emissions. A farmer who plants winter cover crops to increase the productivity of his soil will also improve water quality in local streams by reducing erosion. Discussion Topic Question: Taking into account the examples provided above to explain both negative and positive externalities, find two more examples for each externality and provide supportive information

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information

Section: Chapter Questions

Problem 10QP

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A negative externality is a cost associated with an action that is not borne by the person who chooses to take that action.

Companies that spill oil into the ocean do not bear the full costs of the resulting harm to the marine environment, which include everything from degraded commercial fisheries to reduced endangered sea turtle populations
Commuters generate emissions of air pollution, which lowers the ambient quality of the air in areas they pass through and causes health problems for other people.
Developers who build houses in bucolic exurban settings cause habitat fragmentation and biodiversity loss, inciting a cost on the public at large.

A positive externality is a benefit associated with an action that is not borne by the person who chooses to take that action.

A homeowner who installs a rain barrel to collect unchlorinated rainwater for her garden also improves stream habitat in her watershed by reducing stormwater runoff.
A delivery company that reoptimizes its routing system to cut fuel costs also improves local air quality by cutting its vehicle air pollution emissions.
A farmer who plants winter cover crops to increase the productivity of his soil will also improve water quality in local streams by reducing erosion.

Discussion Topic Question:

Taking into account the examples provided above to explain both negative and positive externalities, find two more examples for each externality and provide supportive information

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