All of the following are examples of externalities EXCEPT
A) carbon dioxide from energy generation that adds to the worldwide,long-term greenhouse effect.
B) heat from a factory that makes the neighbouring tomato patches more productive.
C) a defective part that causes an automobile to break down three months after purchase.
D) acidic smoke that produces acid rain.
E) a chemical plant that pollutes the air in your community.

Question

Quizplus · Accepted Answer

A defective part causing an automobile to break down is not an externality; it is a direct consequence of a product defect affecting the consumer who purchased it. Externalities involve third-party effects not directly involved in the transaction.

All of the Following Are Examples of Externalities EXCEPT