Homework Answers
15.
Since when action of one individual creates benefits to others but they do not pay anything for it, then it is called positive externality.
When action of one individual creates loss to others but people who get loss due to that person action, does not receive any compensation from that person, then it is called negative externality.
It is possible to eliminate the inefficiency that arises from an external cost by establishing property rights.
Hence option third is the correct answer.
16.
The cost of producing an additional unit of a good or service that is borne by the producer of that good or services is called the private marginal cost.
Hence option second is the correct answer.
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