Asked by maisha ahmed on Jun 27, 2024
Verified
An external benefit is a:
A) negative externality.
B) benefit that accrues to domestic firms as a result of the actions of foreign (external) firms.
C) benefit that accrues to foreign (external) firms as a result of the actions of domestic firms.
D) benefit that individuals or firms confer on others without receiving compensation.
External Benefit
A benefit that affects people other than the direct consumers or producers of a good or service, often leading to positive spillover effects.
Negative Externality
A situation where a third party suffers from a transaction or activity they are not directly involved in, often leading to market failure if not corrected by government intervention.
Compensation
The total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed.
- Comprehend the concept of external benefits within environmental economics and their effect on market results in the absence of regulation.
Verified Answer
RK
Rohan KapoorJul 03, 2024
Final Answer :
D
Explanation :
An external benefit occurs when individuals or firms provide benefits to others without receiving compensation. It is a type of positive externality, which refers to the benefits that accrue to third parties as a result of the actions of others. A classic example of an external benefit is education, which can lead to better-informed citizens and a more productive workforce, benefitting society as a whole.
Learning Objectives
- Comprehend the concept of external benefits within environmental economics and their effect on market results in the absence of regulation.