Which of the following is NOT an example of a negative externality?
A)A multinational corporation produces waste products that contaminate local groundwater and make the regional water undrinkable.
B)The power generation of a local factory produces soot that covers nearby houses.
C)The production of toys by an international corporation produces some waste products that the company pays to have disposed of properly.
D)A newly built airport services hundreds of jets that are loud and disturb nearby residents.
E)A military conducts live-ammunition training exercises,and some of the material from the exercises ends up on other people's private property.

Question

Quizplus · Accepted Answer

A negative externality is a cost that is imposed on a third party (not involved in the transaction) and is not accounted for in the market price. Option C indicates that the company is disposing of its waste products properly and paying for the cost, so it is not an example of a negative externality. Options A, B, D, and E indicate situations where an activity causes harm to third parties (contaminating water, creating pollution, noise disturbance, and damage to property), which are examples of negative externalities.

Which of the Following Is NOT an Example of a Negative