Which of the following are examples of an externality? Please select all that apply.
A) The cost to a cigarette smoker of a packet of cigarettes
B) Noise levels for households who live near airports
C) The effect on the value of homes for existing homeowners of an increase in the reputation of schools in the neighbourhood
D) The cost of petrol to a motorist

Question

Quizplus · Accepted Answer

B) Noise levels for households who live near airports and C) The effect on the value of homes for existing homeowners of an increase in the reputation of schools in the neighbourhood are examples of externalities because they represent costs or benefits that affect a party who did not choose to incur that cost or benefit. A) and D) are not externalities because they are direct costs to the consumers making the purchase.

Which of the Following Are Examples of an Externality? Please