Which of the following is an example of a negative externality?
A) A decrease in available educational options due to government intervention.
B) An increase in government bureaucracy and red tape.
C) An increase in the incidence of cancer due to pollution.
D) An introduction to a pollution decreasing technology.

Question

Quizplus · Accepted Answer

The increase in cancer due to pollution is an example of a negative externality because it affects people who are not directly involved in the production or consumption of the product causing pollution. The cost of this harm is not factored into the market price of the product, and therefore the market fails to allocate resources efficiently. A negative externality occurs when an economic activity imposes an external cost on a third party without compensation.

Which of the Following Is an Example of a Negative