The production of a good generates a foul-smelling gas which is released into air by factories producing the good.
-Refer to the scenario above. This implies that the production of the good gives rise to ________.
A) a positive externality
B) a negative externality
C) economies of scale
D) diseconomies of scale

Question

Quizplus · Accepted Answer

The release of a foul-smelling gas into the air by factories is an example of a negative externality because it imposes a cost on society that is not reflected in the price of the good, such as air pollution and potential health issues for the surrounding community.

The Production of a Good Generates a Foul-Smelling Gas Which