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What is meant by externalities in general equilibrium?

      

What is meant by externalities in general equilibrium?

  

Answers


peter
Externality is a situation where economic activities leads to market failure because price of products does not reflect the cost and benefits of products and services. Equilibrium means balancing off between buyer and seller. Therefore negative externality is a situation producer does not not bear all cost thus excess production and a positive externality in equilibrium is where buyer does not get all benefits of the goods resulting in decrease in production.
PETERMAN answered the question on May 30, 2019 at 14:25


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