If it costs $2,000 to pick up the litter along a highway, then the cost of the externality is:
A) $0.
B) more than $0, but less than $2,000.
C) $2,000.
D) more than $2,000, but finite.
E) infinite.

Question

Quizplus · Accepted Answer

The cost of the externality is the cost of the negative impact that the litter has on the environment and other individuals. If it costs $2,000 to pick up the litter, then that is the cost of the externality. Therefore, the answer is C.

If It Costs $2,000 to Pick Up the Litter Along