Which of the following is an example of a negative externality?
A) There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers.
B) The opening of a new shopping mall increases the business of nearby restaurants.
C) A consumer pays a higher price than another consumer does for the same product.
D) Consumers pay a sales tax in addition to the price of a product.

Question

Quizplus · Accepted Answer

The negative externality is the increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers. This is a cost that is not incurred by the drivers of the cars, but by pedestrians who are not participating in the market transaction (i.e. they are not buying or selling the electronic billboard).

Which of the Following Is an Example of a Negative