Suppose Frank likes to snack on sugary candy. Frank knows that it's bad for his teeth to eat sugary candy, but he doesn't care. Frank's snacking habits have no impact on anyone other than Frank. In this case, Frank's consumption of sugary candy generates:
A)a negative externality.
B)a positive externality.
C)neither a positive nor a negative externality.
D)both a positive and a negative externality.

Question

Quizplus · Accepted Answer

Since Frank's consumption of candy has no impact on anyone other than Frank, it generates neither a positive nor a negative externality. That is, all of the costs and benefits of Frank's snacking habits, fall on Frank.

Suppose Frank Likes to Snack on Sugary Candy