Economics 12th Edition by William Baumol, Alan S Blinder

Exercise 5

Assume the inventor of the snow cleaner gets only 3 percent of the benefits, the remainder consisting of reduced medical bills for back pain. In the general public, explain why this is an externality. How large is it Is it a beneficial externality How will it affect the number of snow cleaners it is most profitable to manufacture, as compared to the number that best contributes to the general welfare