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In economics, ‘Externalities’ refer to

In economics, ‘Externalities’ refer to Correct Answer Positive or negative consequence of an economic activity

The correct answer is Option 3.
Key Points
  • Externalities occur when producing or consuming goods cause an impact on third parties not directly related to the transaction.
  • Externalities can either be positive or negative.
Additional Information
  • Positive Externality
    • A farmer grows apple trees. An external benefit is that he provides nectar for a nearby beekeeper who gains increased honey as a result of the farmers’ orchard. The beekeeper provides an external benefit to the apple grower because his bees help to fertilise the apple tree
  • Negative Externality
    • Making furniture by cutting down rainforests in the Amazon leads to negative externalities to other people. Firstly it harms the indigenous people of the Amazon rainforest. It also leads to higher global warming as there are fewer trees to absorb carbon dioxide.

Related Questions

Given below are six sentences of a passage. The first and sixth sentences are given in the beginning as SI and S6. The middle four-sentence in each have been jumbled up and labelled as P, Q, R and S. You are required to find the proper sequence of the four sentences. S1: The Nobel Prize for Economics in 2018 was awarded to Paul Romer and William Nordhaus for their work in two separate areas : economic growth and environmental economics respectively. S6: Among recent winners of Nobel Prize in Economics, it's hard to think of one issue which is more topical and relevant to India. P: But there is a common thread in their work. Q: In economic jargon, it's termed as an externality. R: Productive activity often has spillovers, meaning that it can impact an unrelated party. S: Romer and Nordhaus both studied the impact of externalities and came up with profound insights and economic models.
Each item consists of six sentences of a passage. The first and sixth sentences are given in the beginning as S1 and S6. The middle four sentences in each have been jumbled up and labelled as P, Q, R and S. You are required to find the proper sequence of the four sentences and mark your response accordingly on the Answer Sheet. S1 :The Nobel Prize for Economics in 2018 was awarded to Paul Romer and William Nordhaus for their work in two separate areas : economic growth and environmental economics respectively.
S6 :Among recent winners of Nobel Prize in Economics, its hard to think of one issue which is more topical and relevant to India.
P :But there is a common thread in their work.
Q : In economic jargon its termed as externality.
R : Productive activity often has spillovers, meaning that it can impact an unrelated party.
S :Romer and Nordhaus both studied the impact of externalities and came up with profound insights and economic models.
The correct sequence should be
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