When residents surrounding an airport complain about noise from aircraft landings and takeoffs, the relevant economic analysis is that of
A)externalities.
B)equality-efficiency trade-off.
C)comparative advantage.
D)the cost decrease of the service sector.
E)the cost disease of personal services.

Question

Quizplus · Accepted Answer

The situation described is a classic example of a negative externality, where the cost of the noise pollution is being imposed on those who are not involved in the production or consumption of the air travel. Economic analysis of externalities would consider the trade-offs between the costs and benefits of the airport's operations to society as a whole.

When Residents Surrounding an Airport Complain About Noise from Aircraft