What is an example of an externality
A)the impact of bad weather on the income of farmers
B)the impact of the personal income tax on a person's ability to purchase goods and services
C)the impact of pollution from a factory on the health of people in the vicinity of the factory
D)the impact of increases in health care costs on the health of individuals in society

Question

Quizplus · Accepted Answer

An externality is a cost or benefit that affects a party who did not choose to incur that cost or benefit. In this case, the pollution from the factory affects the health of people who are not involved in the production process, making it an example of an externality. The other choices are not examples of externalities, as they do not involve a cost or benefit that affects parties who did not choose to incur it.

What Is an Example of an Externality