An example of an externality is the impact of
A)bad weather on the income of farmers.
B)the personal income tax on a person's ability to purchase goods and services.
C)pollution from a factory on the health of people in the vicinity of the factory.
D)increases in health care costs on the health of individuals in society.

Question

Quizplus · Accepted Answer

Pollution from a factory is an example of a negative externality because it affects the health of people in the area surrounding the factory without those affected individuals being compensated for the harm done. The factory is likely not paying the full cost of the pollution it creates, which is why it is considered an externality.

An Example of an Externality Is the Impact of