Question

Smoking tobacco creates a ________ externality.

A) negative consumption
B) negative production
C) positive consumption
D) positive production
E) none of the above

Answer 1

Smoking tobacco creates a negative consumption externality, specifically through second-hand smoke.

Step-by-step explanation:

Smoking tobacco creates a negative consumption externality. This means that the consumption of tobacco by individuals has a negative impact on others who are not involved in the transaction and are not compensated for the harm caused. Second-hand smoke is an example of a negative externality caused by smoking, as it can harm the health of non-smokers.