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What Is the Consequence of a Positive Externality in a Market

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Essay

What is the consequence of a positive externality in a market? What is the consequence of a negative externality? Why those consequences occur?


Definitions:

Spreading

The practice of diversifying investments or risks to minimize potential losses.

Average Variable Cost

The total variable costs of production divided by the quantity of output produced, representing the cost per unit of output.

Total Cost

The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.

Fixed Cost

Costs that do not change with the level of output or production, such as rent, salaries, and insurance, which are incurred regardless of business activity levels.

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