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.

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Definitions:

Social Influence

The effect that the words, actions, or mere presence of other people have on our attitudes, beliefs, or actions.

Conformity

The adjustment of one's behaviors, attitudes, or beliefs to match those of the group or to meet group standards.

Propinquity

The physical or psychological proximity between people, influencing their likelihood of forming relationships.

Deindividuation

A psychological state of decreased self-evaluation, causing people to ignore usual restraints in the group setting.