Which of the following is an example of a negative externality?
A) A Japanese company begins to produce cars and earns large profits.
B) An employee of a chemical company spills acid on his arm, causing severe damage.
C) John plants fruit trees in his front yard, which attracts bees, which sting neighbor Mary.
D) Sally buys coffee at McDonald's, spills some on her, and burns her arm.

Question

Quizplus · Accepted Answer

John's action of planting fruit trees has a negative externality because it causes harm to his neighbor Mary by attracting bees that sting her. The negative impact is not reflected in John's decision to plant fruit trees and is therefore an example of a negative externality.

Option A is an example of a private company earning profits and does not involve any external impact.

Option B is an example of an internalized negative impact on an employee of a chemical company, and not a negative externality.

Option D is an example of a personal mishap and does not involve any external impact on others.

Which of the Following Is an Example of a Negative