Asked by sourav saharan on Jun 28, 2024
Verified
Refer to Figure 10-2. This market is characterized by
A) government intervention.
B) a positive externality.
C) a negative externality.
D) a price control.
Negative Externality
occurs when the production or consumption of a good or service imposes costs on third parties not directly involved in the transaction.
- Assess the ramifications of positive and negative externalities on personal and communal costs and benefits.
Verified Answer
MJ
Marcelina Jimenez-SmithJun 28, 2024
Final Answer :
C
Explanation :
The presence of a negative externality in a market typically means that the cost of producing a good or service is not fully borne by the producer or the consumer, but instead affects third parties who are not involved in the transaction. This can lead to overproduction or overconsumption of the good or service, as the market price does not reflect the true cost to society.
Learning Objectives
- Assess the ramifications of positive and negative externalities on personal and communal costs and benefits.