Year 12 Recap - Positive Externalities
Next up on our Year 12 Recap are positive externalities.
If you are in Year 12, it is essential that you are confident with the basic principles of externalities and how to graphically represent this on a demand and supply diagram. This is an important topic as exam questions centre around markets that fail and how policymakers can correct a misallocation of resources.
An externality is a cost/benefit that is passed onto third parties as a result of the production and/or consumption of a good or service. Positive externalities represent goods which create an external benefit for society but are underprovided and underconsumed by the market as agents do not take into account the positive benefits which are released onto society.
Here Jack guides you around the topic of Positive Externalities:
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