An example of a negative externality created in the market system would be
A) poverty.
B) unemployment.
C) a change in one consumer's tastes and preferences.
D) water pollution.

Question

Quizplus · Accepted Answer

Water pollution is a negative externality that can result from firms or individuals engaging in production or consumption activities. The cost of water pollution is not borne by the polluter but is instead imposed on others who must deal with the consequences, such as decreased water quality or harm to fish and wildlife. This illustrates how market transactions may have social costs that are not accounted for by the parties involved.

An Example of a Negative Externality Created in the Market