The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of
A)market equilibrium.
B)market power.
C)externalities.
D)laissez-faire.

Question

Quizplus · Accepted Answer

The consumption of water includes pesticide runoff from local farmers' fields, which is an example of a negative externality. Negative externalities refer to the costs imposed on third parties who are not involved in the activity that generates the costs. In this case, the local residents are not responsible for the pesticide runoff, but they are affected by it. The market may not account for these external costs, leading to an inefficient allocation of resources.

The Consumption of Water by Local Residents That May Include