Question

Choose teh correct answer for each part below

a.) an example of production generatin a positive externality

A. second hand smoke from cigarettes

B. air pollution from burning petrol to power cars

C. an individual getting vaccinated for a contagious disease

D. flow pollination from producing honey with bees

b.) an example of production generating a negative externality is

A. the risk of radioactive contamination near a nuclear power plant

B. traffic congestion during busy travel times

C. an individual getting vaccinated for a contagious disease

D. maintaining a clean property that increases the property values of neighboring houses

Answer 1

A positive exterality is basically the positive effect that an activity imposes on a third party similarly a negative externality is a negative effect that an activity imposes on third party.

a) D. Flow pollination from producing honey with bees, here bees will help in the pollination of flowers, which has positive effect on the gardner. Option C here is an example of positive consumption externality while Option A is negative consumption externality while Option B is negative production externalities.

b) A. The risk of radioactivity contamination near a nuclear power plant, Option B is example of negative consumption externality, Option C is positive consumption externality while Option D is positive consumption externality.