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Term: external cd rw
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external cd rw!
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external cd rw
Comprehensive Analysis
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1) "External" -- As to external cd rw 1ex·ter·nal Pronunciation: ek-'st&r-n&l Function: adjective Etymology: Latin externus external, from exter -- more at EXTERIOR 1 a : capable of being perceived outwardly <external signs of a disease> b (1) : having merely the outward appearance of something : SUPERFICIAL (2) : not intrinsic or essential <external circumstances> 2 a : of, relating to, or connected with the outside or an outer part <the building's external features> b : applied or applicable to the outside <a lotion for external use> 3 a (1) : situated outside, apart, or beyond; specifically : situated near or toward the surface of the body (2) : arising or acting from outside <an external force> b : of or relating to dealings or relationships with foreign countries c : having existence independent of the mind <external reality> - ex·ter·nal·ly /-n&l-E/ adverb Pronunciation Symbols In economics, an externality is a cost or benefit from an economic transaction that parties "external" to the transaction receive. Externalities can be either positive, when an external benefit is generated, or negative, when an external cost is imposed upon others. An externality occurs when a decision causes costs or benefits to third parties (stakeholders), often, though not necessarily, from the use of a public good (for example, production which causes pollution may impose costs on others, making use of the public good air). In other words, the participants do not bear all of the costs or reap all of the gains from the transaction. As a result, in a competitive market too much or too little of the good may be produced and consumed from the point of view of society, depending on incentives at the margin and strategic behavior. If third parties benefit substantially, such as in areas of education or safety, then the good will be under-provided (or under-consumed); if costs to "the public" exceed costs to the individual(s) making the choice in areas such as pollution then the good will be over-provided, from society's point of view. The "point of view" is specified as the greatest collective economic utility for society. This should be contrasted with purely private economic agreements that do not affect third parties, where the assumption may be made that, if each party is acting in his or her own interests (as defined by utility) and there are no other major market failures, the agreement or exchange improves overall utility for society. Put more simply, if an economic transfer between two parties enhances the utility of both without negatively affecting the utility of any third party, the well being (collective utility) of society is improved; if the utility of others is harmed, it is no longer unambiguously clear that society's collective utility has increased, and may have decreased. - 1 Implications
- 2 Types of externalities
- 3 Externalities in supply and demand
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