A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A negative externality that can result is
A) the cost of the bee hives to the beekeeper.
B) the possibility of the bees stinging the students at the school.
C) the bees helping to pollinate the orchard, leading to more fruit.
D) the honey the bees produce.

Question

Quizplus · Accepted Answer

The negative externality in this scenario is the possibility of the bees stinging the students at the school. Negative externalities occur when the production or consumption of a good causes a harmful effect to a third party. In this case, the third party is the students at the school who are not involved in the beekeeping business but could be harmed by it.

A Beekeeper Decides to Locate Her Business on a Plot