QQuestionEconomics
QuestionEconomics
"Which is an example of an externality?
A. The cost to restore habitat in previously destroyed areas.
B. The use of the atmosphere for air pollution.
C. Tax breaks for high-efficiency appliances.
D. Roads maintained with a tax on gasoline."
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Answer
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Step 1I'll solve this problem step by step, focusing on the concept of externalities in economics.
Step 2: Understanding Externalities
An externality is an economic cost or benefit that affects a third party who did not choose to incur that cost or benefit. These are side effects of economic activities that impact unrelated parties.
Final Answer
The use of the atmosphere for air pollution is an example of a negative externality. Explanation: Pollution creates costs for society (health issues, environmental damage) that are not directly paid for by the polluting industries, making it a classic externality.
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