Which of the following is an example of detrimental externality?
A)A trailer's entry onto an overcrowded road that delays the movement of other vehicles.
B)Fall in demand for gasoline in the US softens the price of gasoline in the global market.
C)Government investment in energy generation from non-conventional sources.
D)Society devotes huge quantity of its scarce resources for vital innovative activity.

Question

Quizplus · Accepted Answer

A trailer's entry onto an overcrowded road that delays the movement of other vehicles is a classic example of a detrimental externality. The action of the trailer driver is causing a negative impact on other road users by creating a traffic jam, leading to delays, fuel wastage, and stress, among other negative effects. The trailer driver is not bearing the costs of his action, leading to a market failure that requires intervention to correct the situation.

Which of the Following Is an Example of Detrimental Externality