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The existence of externalities can lead to inoptimal equilibrium if the markets are left to themselves....

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Economics

The existence of externalities can lead to inoptimal equilibriumif the markets are left to themselves. Based on your understandingof externalities, first, explain negative and positiveexternalities. How can the government intervene in order to assurea socially optimal equilibrium? Remember to contextualize, define,exemplify, and illustrate relevant concepts.

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Externality is a situation in which there is cost incurred or benefits received by a third person by the economic activity of one person If there is cost incurred by a person due to the activity of other person for which he is not paid then this is called negative externality For example the dirty smoke left by an    See Answer
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