Question

Negative externalities are created when

A. an increase in the price of butterfat drives up the price of ice cream.
B. a driver leaves his car in a parking space after the meter expires and receives a ticket.
C. a driver drives recklessly on a busy highway.
D. a driver pulls over to help a stranded motorist fix a flat tire.

Answer 1

The correct answer is (C)

Step-by-step explanation:

Negative externalities occur when an individual or firm making a choice negatively affect other parties. A driver who recklessly drives a car on a busy highway is a negative externality because the amusement of the driver is negatively affecting other people. A negative externality arises when the benefit of a decision is less than the negative outcomes of that decision.