Briefly explain what is meant by the term "externality" and how it occurs. Illustrate with examples
An externality occurs when a market transaction affects a third party who is not involved in the transaction. Externalities, which are sometimes called spillovers, can be positive or negative.
Examples of negative externalities are a neighbor's barking dog and noise from a nearby highway. An example of a positive externality includes a visually appealing flower garden or landscape.
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Heartland and Soulland) If trade now opens up between the two economies, we can expect that:
A) Heartland will export drill presses to Soulland and import corn from it. B) Heartland will export corn to Soulland and import drill presses from it. C) both countries will export corn and drill presses. D) both countries will import corn and drill presses.
What are key economic variables that economists use to predict a new phase of a business cycle referred to as?
(A) Economic growth (B) A recession (C) A contraction (D) Leading indicators