If a homeowner uses wood to heat his house,

Question

Quizplus · Accepted Answer

If the smoke bothers the homeowner's neighbours, it represents an external cost because the homeowner is not bearing the full cost of burning wood. Additionally, option B is incorrect because the price of the wood is an internal cost to the homeowner, not an external cost. Option A is incorrect because a reduction in heating oil prices is not a direct result of the homeowner using wood for heating. Option D is also incorrect because bothering neighbours with smoke is not an external benefit.

If a Homeowner Uses Wood to Heat His House