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    Industry analysis

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    Find two sources to help you answer the following questions about the industry of your choice.

    ? Research any negative or positive externalities the industry produces. Does the transaction of a buyer and seller directly affect a third party? Is the effect a negative or positive externality? How does the externality impact the economy?

    ? Research whether the industry produces public goods or private goods, or is a natural monopoly. Are the goods or resources rival, excludable, or neither? Explain.

    Organize your research using the annotated bibliography template in Appendix B. Include references and a short summary of the major points in the articles or Web sites.

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    Solution Preview

    *Research any negative or positive externalities the Oil/Petroleum industry produces.
    - Research any negative or positive externalities the industry produces.

    'Externalities' is the economic term for the costs (e.g. environmental and social) of an economic activity which are not borne by the operator, but instead by the wider community. Thus the externality is a spill over from an economic activity. It is often referred to as a by-product of the market mechanism (supply equals demand). For example, if a forestry operation contributes to species loss or habitat destruction and these 'costs' are not somehow paid by the operator and thus reflected in the price of the final product, they will be 'paid' by the wider community - locally, nationally or globally. They ...

    Solution Summary

    This explains the industry analysis and discusses the concepts such as externalities, nature of goods