Which of the following is NOT an example of an externality?

Question

Quizplus · Accepted Answer

Externality refers to a cost or benefit incurred or received by a third party who has no control over the creation of that cost or benefit. Choices A, C, and D are examples of externalities because they involve third-party effects not reflected in the cost of the goods or services involved. Choice A (vaccine development) can have positive externalities by reducing the spread of disease. Choice C (shipbreaking) and D (dumping chemicals) involve negative externalities affecting the environment and public health. However, choice B (gas prices rising due to increased vacation travel) is not an externality but a direct effect of supply and demand; the rise in gas prices is a market response, not a cost or benefit imposed on third parties outside the transaction.

Which of the Following Is NOT an Example of an Externality