Which of the following is true of externalities?
A) All externalities are negative in nature.
B) They are only borne by individuals responsible for creating them.
C) Technological innovation results in complete eradication of negative externalities.
D) Externalities can be in the form of benefits reaped by individuals.

Question

Quizplus · Accepted Answer

Externalities can be in the form of either costs or benefits. It is not necessary that all externalities are negative. In some cases, individuals may derive benefits from the actions of others, such as when a homeowner maintains a beautiful garden that enhances the value of neighboring properties. Technological innovation may reduce negative externalities, but complete eradication is often difficult to achieve. Externalities are felt by both those responsible for creating them and by third parties who are affected by them.

Which of the Following Is True of Externalities