Sustainable growth entails output increses which do not limit future output potential by running down available resources. Sustainability is defined as the ability of a country to stay in a consistently developing or more developed state by meeting the needs of the present without compromising the ability of future generations to continue development. The Lorenze curve also shows the relationship between the cumulative population and the cumulitive wealth as an example was given previously. Thus, a perfectly linear curve shows perfect equality, and a backwards L shaped curve represents a situation where only one person has all the wealth. The Lorenz curve shows the proportion of wealth that familes have from the poorest to the richest. The distribution of income can be represented by the Lorenz curve. Income distrbution differs across households and individuals because of differences in jobs and economic history. Therefore income inequality in the United States is huge. The overall GDP of a country could increase, yet the wealthiest man could own 99% of the money and therefore the increase may not be beneficial to the nation as a whole. Relationship between a country's wealth, and the overall distribution of income. Improves their standing as a more developed country is automatically "better off," regardless of how small or large the improvement actually is. This is because a country that acquires or When a country grows, the population on average becomes wealthier relative to its recent history. Such pollution can affect large numbers of people and animals and can have long term health and environmental consequences. when someone living next to a factory deals with the hazards associated with pollution from the production of goods created by the factory).Īnother important issue with positive and negative externalities is the pollution that occurs as a result of the production of goods. A negative production externality occurs when someone suffers a negative externaility as a resuly of someone else producing goods (ex. when a donut shop makes donuts, passerbys benefit from the delicious odors of donuts being made, regardless of whether or not anyone buys them). A positive production externality occurs when someone benefits from a positive externaility as a result of someone else producing goods (ex. A negative consumption externality occurs when someone suffers as a result of other people consuming. A positive consumption externality occurs when someone benefits as a result of someone else consuming. Positive and negative externalities are further categorized into production and consumption. Other negative externalities include pollution, land and water degradation, and over-use of resources. ![]() Even people who don't smoke have to suffer a negative externality of second hand smoke from the people smoking near them. An example of a negative externality is smoking. The people who got cancer as a result of living downstream of the factory may not work at that factory, and may have never bought a computer produced at the factory, but they still suffer a cost from the production of the computers. An example of a negative externality would be increased cancer rates in people living downstream of a polluting computer factory. Negative externalities occur when a third party is not directly involved in the production or consumption of the good creating the externality suffers negative results. ![]() The restaurant owners did not pay to build the amusement park, but they get extra business as a result of the park. Positive externalities occur when a person or group of people benefit from the production or consumption of a good without being directly involved in the production or consumption of that good.įor example restaurants in Orlando receiving extra customers as a result of the attraction of Disney World would be a positive externality. There are two types of externalities: positive and negative. Externalities are consequences imposed on outside parties during production or consumption.
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