Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A public park that increases property values: A private garden that does not affect neighbors
B
A vaccine that protects individuals: A candy that only satisfies hunger
C
A concert that draws a crowd: A single musician playing at home
D
A new highway that reduces commute time: A local road with no traffic issues
Understanding the Answer
Let's break down why this is correct
Answer
Positive externalities occur when a person's or company's actions benefit others who are not directly involved in the transaction. This can be compared to the scenario of public parks. Just as a public park provides joy and relaxation to everyone in the community, even if they don't pay for its upkeep, positive externalities create a situation where the social benefit is greater than the private benefit. For example, if a company invests in training its employees, the skills they gain not only help the company but also contribute positively to the community as those employees become more productive and engaged citizens. Therefore, the relationship can be summarized as A:B :: Public Parks:Positive Externalities.
Detailed Explanation
A public park helps everyone by making the area nicer. Other options are incorrect because This option confuses personal benefit with social benefit; This choice misses the idea of shared benefits.
Key Concepts
Market Equilibrium
Externalities
Social Optimality
Topic
Analyzing Market Equilibrium with Externalities
Difficulty
easy level question
Cognitive Level
understand
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