Which of these is an example of an external cost?
A)an increase in the value of land you own when a nearby development is completed.
B)the costs paid by a company to build an automated factory.
C)decreased property values in a neighbourhood where several houses are burglarized.
D)the higher price you pay when you buy a heavily advertised product.

Question

Quizplus · Accepted Answer

Decreased property values in a neighborhood where several houses are burglarized is an example of an external cost because it is a negative consequence that is imposed on others who did not choose to be part of the activity leading to the cost.

Which of These Is an Example of an External Cost