Which of the Following Is Not an Example of an Externality

question 211

Multiple Choice

Which of the following is not an example of an externality?

• A) Drunk drivers raise everyone's auto insurance premiums.
• B) The price of lumber increases as lumberjacks' wages increase.
• C) The neighbor's beautiful front yard increases your home value.
• D) Someone drives a car that emits thick black smoke.
• E) People who live near a bakery enjoy the smell of baked bread.

---

Definitions:

Agricultural Resources

Inputs used in the production of agricultural goods, such as land, labor, and capital, along with more specific resources like seeds and fertilizers.

United States

A federal republic consisting of 50 states, a federal district, five major self-governing territories, and various possessions, known for being the world’s oldest surviving federation.

European Union

A political and economic union of 27 European countries that are located primarily in Europe, fostering cooperation in economic, social, and security matters.

Price-support Programs

Government initiatives designed to stabilize or increase market prices of specific commodities by buying excess supply, offering subsidies, or setting minimum prices.