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Provide an Example of a Positive Externality and Explain: 1)

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Essay

Provide an example of a positive externality and explain: 1) why it should be considered a positive externality and 2) what could be done in order to internalize the externality.


Definitions:

Price-Taker Market

A market condition where individual buyers or sellers have no power to influence the price of goods and services, typically due to high competition and standardized products.

Economic Profits

The difference between a firm's total revenues and its total opportunity costs.

Barriers to Entry

Economic, procedural, regulatory, or technological factors that obstruct or limit the possibility of new competitors entering an industry.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, allowing firms to make adjustments and the market to stabilize at a point where supply equals demand.

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