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Indu Dhiman posted an Question
June 04, 2021 • 00:20 am
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30 points
30 points
- UGC NET
- Economics
Question: 25/50 unit solved papers (1-10) - economics if the social cost of producing chicken is greater than the private cost, then we can be sure that. positi
Question: 25/50 Unit Solved Papers (1-10) - Economics If the social cost of producing chicken is greater than the private cost, then we can be sure that. positive externality exist the price of chicken is too low a negative externality exist Chicken production should be subsidized View Solution a negative externality exist
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Ravindra nath mahto
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Firstly, we will try to understand the negative externality. Then, we can answer this question very easily. So, negative externality is the external bad impact or cost on those peoples' who are neither directly engaged in production or consumption. For example, if I smoke in public place then I surely harm my body by smoking but I also harm the nearby persons to me. This is called negative externality in consumption. That's why if I create negative externality then I must be charged in such a way so that those people can be easily compensated. Therefore, the price should be charged equal to the social cost in case of negative externality.
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Ravindra nath mahto
Firstly, we will try to understand the negative externality. Then, we can answer this question very easily. So, negative externality is the external bad impact or cost on those peoples' who are neither directly engaged in production or consumption. For example, if I smoke in public place then I surely harm my body by smoking but I also harm the nearby persons to me. This is called negative externality in consumption. That's why if I create negative externality then I must be charged in such a way so that those people can be easily compensated. Therefore, the price should be charged equal to the social cost in case of negative externality.
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Ravindra nath mahto![best-answer]()
As I have already defined negative externality in another question. However, Let's us understand it once more. Negative externality is the cost to the third party or the society in an economic transaction whether consumption or production. For example, I purchase a speaker which costs something to me. Now, if I play this speaker very loudly, I will surely disturb my neighbours which is nothing but a kind of cost to my neighbours or whatever which we call negative externality. Hence, in case of negative externality, social cost is greater than the private cost.