The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2

-Which of the following activities will generate a negative externality?

Question

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2
 
-​Which of the following activities will generate a negative externality?

Quizplus · Accepted Answer

The setting up of a chemical factory in a residential area will generate negative externalities such as pollution, health hazards, and reduction in the quality of life for the residents. The other options listed do not result in negative externalities, and may even result in positive externalities, such as the inoculations for communicable diseases, which can prevent the spread of diseases to others.

The Table Below Shows the Payoff (Profit) Matrix of Firm