When the benefits of an activity are received by those who are not directly involved in it:

Question

Quizplus · Accepted Answer

When the benefits of an activity are received by those who are not directly involved in it, a positive externality exists. Positive externalities occur when there are positive spillover effects from an economic activity to third parties. For example, a homeowner who plants a beautiful garden not only enjoys the benefits of the garden, but also provides a pleasant view for neighbors passing by. The neighbors benefit from the garden without paying for it or directly participating in its creation.

When the Benefits of an Activity Are Received by Those