The US Navy determines that the navigation system on its submarines, which use low-frequency radio waves, is reducing the population of humpback whales.The is an example of
A)marginal thinking.
B)comparative advantage.
C)the market mechanism.
D)the Phillips curve.
E)an externality.

Question

Quizplus · Accepted Answer

The situation described here is an externality, which occurs when the actions of one party have an unintended impact on third parties who are not involved in the transaction. In this case, the Navy's use of low-frequency radio waves is harming the humpback whale population, which is not a party to the Navy's operations.

The US Navy Determines That the Navigation System on Its