Which of the Following Is an Example of an Externality

question 26

Multiple Choice

Which of the following is an example of an externality that has been internalized?

• A)Acid rain, originating in the United States, destroys Canadian forests.
• B)Robert Frost breathes the air that has been polluted by the emissions of a nearby steel plant.
• C)Erica Evans, a beekeeper, decides to keep more bees because her neighbor, an orchard owner, has agreed to compensate her for the bees' pollination of the orchard.
• D)Miguel Sanchez, a concert pianist, rehearses Beethoven's "Moonlight Sonata" and his neighbors enjoy the "free concert."
• E)all of the above

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Definitions:

External Benefit

A benefit from a good or service that is received by someone not directly involved in the transaction or production of that good or service, also known as a positive externality.

Pollution

The introduction of contaminants into the natural environment that cause adverse changes and harm to the ecosystem.

Market Failure

A situation where the allocation of goods and services is not efficient, often leading to a net social welfare loss.

Business Sector

A segment of the economy that represents the activities of businesses, corporations, and private enterprises that provide goods and services to consumers.