Question

Give an example of a positive externality and an example of a negative externality.

Short answer

An example of positive externality - Tree plantation by a firm

An example of a negative externality - Pollution

Step-by-step solution

Externality : 

When an economic activity has an impact on individuals, it is called an externality.

Positive Externality :

Positive externality occurs as a result of the producers' or customers' behavior. It is consumption or production that can have a positive impact on third parties.

Negative externality :

Negative Externality refers to the unexpected repercussions of production and consumption that must be borne by others.

Example of positive externality :

A company's tree-planting programme is an excellent example of positive externality, especially in today's world. When a company plants trees, the entire ecosystem is improved, and not only the company, but the entire society benefits.

Example of negative externality : 

An example of a negative externality is the pollution. The use of fossil fuels such as coal, petroleum, and others results in the depletion of non-renewable resources, which has a significant environmental impact. Using these sorts of fuels results in the release of a variety of hazardous gases, which contribute to global warming as well as a variety of illnesses.