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:

Expectations

The anticipations or beliefs about future events or outcomes, which can influence current behavior and decision-making.

Price of Oil

The cost per barrel of crude oil as determined in global markets, influenced by factors such as supply, demand, geopolitical events, and market speculation.

Unemployment

Is the condition of someone actively looking for employment but unable to find work, often used as a key economic indicator.

Central Bank

The principal monetary authority of a country, responsible for regulating the money supply, issuing currency, and managing interest rates to achieve economic objectives.