What Is Meant by a Positive Externality? Use an Example

question 148

Essay

What is meant by a positive externality? Use an example to assist your explanation.

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Definitions:

Direct Labor Hours

The total number of work hours spent by employees who directly manufacture or produce goods.

Predetermined Overhead Rate

An estimate used to allocate overhead costs to products or job orders, calculated before the costs are incurred.

Finished Goods

Items that are finished with the production phase but are still awaiting sale or delivery to consumers.

Cost of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials and labor costs.