If a homeowner uses wood to heat his house,
A)he may generate an external cost if the smoke bothers his neighbours.
B)the price of the wood represents an external cost to the homeowner.
C)the price of the wood represents an external cost to the homeowner,unless he harvests the wood himself.
D)he may generate an external benefit if the smoke bothers his neighbours.
E)he may generate an external benefit if the price of heating oil goes down in his region.

Question

Quizplus · Accepted Answer

Burning wood can produce smoke and pollutants, which can be a nuisance to neighbors or cause health problems. This creates an external cost to the community as they bear the negative consequences of the homeowner's choice to burn wood.

If a Homeowner Uses Wood to Heat His House