Which of the following would be classified as a situation where a third party benefits from a market transaction by others?
A) City buying 10,000 trees for green space renewal projects.
B) Increased levels of air pollution in neighborhoods near a football stadium.
C) Allowing a mining company to use a natural lake to discharge waste.
D) Two firms trading pollution credits to avoid cutting their toxic emissions.

Question

Quizplus · Accepted Answer

The purchase of trees for green space renewal projects by a city benefits not only the direct participants in the transaction (the city and the seller of the trees) but also the general public who will enjoy cleaner air, shade, and potentially enhanced property values due to the improved aesthetics and environmental quality. This is a classic example of a positive externality, where a third party benefits from a market transaction between others.

Which of the Following Would Be Classified as a Situation