Explain positive externality and a negative externality

Reference no: EM131253760

Q1.

1. What is the difference between a positive externality and a negative externality? Describe an example of each.

2. Why does an otherwise competitive market with a negative externality produce more output than would be economically efficient?

Q2.

1. Why does an otherwise competitive market with a positive externality produce less output than would be economically efficient?

2. When do externalities require government intervention, and when is such intervention unlikely to be necessary?

Reference no: EM131253760

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