One example of a positive externality is education.A person who is educated is likely to be a more productive person, increasing national income (Amacher & Pate, 2019).You also have the advantage to educate others with your knowledge.

Cigarette smoking is an example of a negative externality.Cigarette smoking causes second hand smoke and it makes it unpleasant for others and it can also lead to excessive consumption of alcohol.

How could you solve your examples of externalities to attain market efficiency?