Which of the following describes a positive externality?
A)John Henry paints the outside of his house in order to increase its market value just before he puts the house up for sale.
B)People who do not attend college still benefit from others who receive a college education.
C)The government imposes a tax on cigarettes in order to discourage smoking among teenagers.
D)Mary volunteers to drive her neighbor's children to soccer practice.

Question

Quizplus · Accepted Answer

A positive externality occurs when a third party benefits from an economic transaction they are not directly involved in. In this case, people who do not attend college benefit from the education of others, as educated individuals can contribute positively to society in various ways.

Which of the Following Describes a Positive Externality