When Lisa drives to work every morning,she drives on a congested highway.What Lisa does not realize is that when she enters the highway each morning she increases the travel time of all other drivers on the highway.In this case,the external cost of Lisa's highway trip
A) increases the social cost above the private cost.
B) lowers the social cost below the private cost.
C) increases the social value above the private benefit.
D) decreases the social value below the private benefit.

Question

Quizplus · Accepted Answer

Lisa's action of driving on the congested highway creates a negative externality, as it affects other drivers who have to endure longer travel times due to increased congestion. This increases the social cost of her trip, which is above the private cost that only she incurs. Therefore, the best choice is A, which states that the external cost of Lisa's highway trip increases the social cost above the private cost.

When Lisa Drives to Work Every Morning,she Drives on a Congested