external benefits

External benefits, often called positive externalities, occur when an activity or decision produces advantages for others who are not directly involved. For example, when a homeowner plants a garden, neighbors may enjoy the beauty and increased property values. Similarly, when a company invests in clean technology, everyone benefits from improved air quality. These benefits enhance social welfare but are not reflected in the market price of goods or services. Recognizing external benefits helps us understand the broader impacts of economic activities and the importance of incentivizing behaviors that yield positive effects for society.