Question

Thousands of people develop lung cancer from second-hand exposure to cigarette smoke. This is an example of a. a market failure caused by an externality. b. a market failure caused by market power. c. a market failure caused by equality.

Answer 1

A. A market failure caused by an externality

Step-by-step explanation:

An externality is a term in economics that refers to a cost or benefit received by a third party. However, the third party has no control over the creation of that cost or benefit. In this case the lung cancer is developed because of smoke generated by a third party.