Discussion Questio

The Government monitors and regulates businesses in both the public and private sectors, to ensure they are complying with Federal, State and local rules and regulations. The result of these regulations can be referred to as positive or negative externalities. Provide an example of positive and negative externalities in the police (public) sector. What kind of impact can these externalities have on a budget and the people responsible for creating the budget? Your initial post should be at least 250 words in length

Solution Preview

Externalities arise when an individual undertakes an activity which impacts on the well-being of a third party and yet does not pay or receive compensation for the impact caused. A positive externality arises when the outcome to the third party is beneficial whereas negative externality arises when the outcome to the third party is costly.

(455 words)