![]() ![]() Rather than $10 million being spent on producing the same number of jumpers, it can be spent on producing a new style of pants or more staff. ![]() Many firms benefit from productivity gains, which has created positive spillover effects.įor example, if business A is spending $10 million less on producing jumpers, it means those resources can be spent elsewhere. The advancement of technology has inevitably’ created private benefits. In turn, local residents benefit even if they do not use such a business. They also create jobs that provide income to residents, which can then further stimulate economic activity in the locality. The construction of new local businesses and other amenities may increase the value of local properties – thereby creating a positive benefit to local residents. Yet all those who benefit are not charged, and the baker has no way of charging them either. For example, a bakery may send the smell of fresh bread through the mall. The issue arises when the third party cannot be charged for receiving such benefits. Positive production externalities occur when a third party benefits from the production of another. ![]()
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