211k views
0 votes
The idea that externalities arise because something of value has no price attached to it is associated with

User C B
by
3.5k points

1 Answer

4 votes

Answer: public goods and common resources

Step-by-step explanation:

Externality is the consequence of a producer's or consumer's action on a third party which did not partake in the action.

The idea that externalities arise because something that is valuable has no price attached is associated with the public goods and the common resources. The provision of public goods such as good roads, defence will lead to positive externalities, while the use of common resources such as fish in the river or the environment will lead to negative externalities e.g polluting the environment will give rise to a negative effect on a third party.

User Abierto
by
3.9k points