Give an Example of an External Benefit

question 133

Essay

Give an example of an external benefit. Explain why markets don't provide the optimal quantity of goods and services that have external benefits.

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Definitions:

Sample Proportions

The ratio of members within a sample that satisfy a given characteristic, often used to estimate the proportion of the characteristic in the entire population.

Standard Error

The standard deviation of the sampling distribution of a statistic, often used in constructing confidence intervals around a sample statistic to estimate the population parameter.

Test Statistic

A metric deduced from a sample's data in the process of hypothesis testing, which aids in determining the rejection of the null hypothesis.

P-value

The probability of observing a statistic at least as extreme as the one observed if the null hypothesis is true.