Which of the following is an example of external cost?

Question

Quizplus · Accepted Answer

The higher level of incidence of cancer for people living near a toxic dump is an example of an external cost because the costs of the pollution and the environmental damage caused by the toxic dump are not borne by the company that created it but by the people who live nearby. This is a negative externality.

Answer: B, D
 The market price of oranges and paying a higher price for oranges at a farmer's market are not external costs. The market price is simply determined by supply and demand, and the higher price at a farmer's market is likely due to the higher costs associated with producing and selling locally. These are not examples of externalities.

Answer: C
 Learning to shop more efficiently as a result of taking an economics course is not an example of an external cost. It is a private benefit that accrues to the person who took the course. It is an example of a positive externality, but not an external cost.

Which of the Following Is an Example of External Cost