externalities
definition:An economic side effect of a good or service that creates both benefits and costs.
positive externalities:Benefits created by production that are passed on to those not involved in the production in any way – such as entrepreneurs.
negative externalities:Costs created by production that are passed on to those not involved in the production in any way – not as labor, resource owner, entrepreneur or consumer.
connected key terms: free riders | market failures


everyday examples
positive:
1▪ your property value goes up when your neighbor fixes up his yard and paints his house
2▪ a skateboard park opens up down the street so your sidewalk and driveway are free from those punk-neighborhood skaters
3▪ a new restaurant opens in your neighborhood and now your favorite restaurant is less crowded

negative:
1▪ your neighbor gets a stupid chihuahua and it barks all night
2▪ you are eating on the patio of a restaurant and some inconsiderate jerk is smoking at the next table and you are breathing in their smoke
3▪ a local factory pollutes the nearby river and it is filthy and full of gunk when you want to use it for recreation

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