When some fraction of the benefit of an activity is received by people not participating in the activity, it is called a (n)

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Shirley Gross

Business

6 September, 12:02

When some fraction of the benefit of an activity is received by people not participating in the activity, it is called a (n)

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Giuliana Salazar · Answer 1

Answer: Positive Externality

Explanation:

Externality is a side effect of an activity that is operated by a particular industry or people which affects the other parties who are not involved in the activity and this cost is not included in the cost of goods and services.

There are two types of externalities; Positive and Negative externality.

Negative externality refers to the externality that affects the other parties in a negative way. For example, smoking.

Positive externality refers to the externality that affects the other parties in a positive way. For example, Education.

Therefore, if some part of the benefit of an activity is received by the third party who is not involved in this activity, it is called Positive Externality.