Which of the following is an example of an externality?
A)Bees kept to make honey pollinate plants belonging to a nearby farmer.
B)Smoke from a chimney backs up into a house.
C)A landowner fishes from her pond.
D)A company adopts technology that reduces the possibility of toxic waste spills.

Question

Quizplus · Accepted Answer

Externalities occur when a third party not directly involved in a transaction is affected. In choice A, the nearby farmer benefits from the bees' pollination without being part of the beekeeping operation, making it a positive externality.

Which of the Following Is an Example of an Externality