An example of external diseconomy would be
A) living downwind from a steel mill.
B) a situation where total social costs exceeded total revenues from a hazardous product.
C) a situation in which general costs to the public are not internalized in a firms production costs.
D) All of the above.
E) None of the above.

Question

Quizplus · Accepted Answer

External diseconomies refer to situations where a firm's production causes negative effects on third parties or the environment, which are not reflected in the firm's costs. All the options provided (A, B, C) are examples of external diseconomies. Living downwind from a steel mill (A) involves negative health and environmental impacts not accounted for by the steel mill. A situation where total social costs exceed total revenues from a hazardous product (B) implies that the broader societal costs of the product (like health issues or environmental damage) are not covered by the revenue it generates. A situation in which general costs to the public are not internalized in a firm's production costs (C) directly describes an external diseconomy, where the negative impacts on society are not reflected in the cost of production.

An Example of External Diseconomy Would Be