📚 Learning Guide
Negative Externalities and Market Failure
easy

Negative externalities in economics are to market inefficiency as a car running out of gas is to what?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Being able to continue driving

B

Requiring a refill to function properly

C

Reducing speed to save fuel

D

Increasing the distance traveled

Understanding the Answer

Let's break down why this is correct

Answer

Negative externalities in economics happen when a decision or action by an individual or company affects others in a harmful way, without those responsible having to pay for the damage. This creates a market inefficiency, just like when a car runs out of gas—it can't function properly anymore. When a car runs out of gas, it stops moving and can't take you to your destination, which is similar to how negative externalities can prevent a market from reaching its full potential. For example, if a factory pollutes the air, it affects the health of nearby residents, leading to increased medical costs and lost productivity. Just as a driver must refuel to continue their journey, society must address negative externalities to ensure markets work efficiently and benefit everyone.

Detailed Explanation

When a car runs out of gas, it needs more fuel to work again. Other options are incorrect because Some might think that a car can keep driving without gas; People might believe that slowing down helps save gas.

Key Concepts

Negative Externalities
Market Failure
Government Intervention
Topic

Negative Externalities and Market Failure

Difficulty

easy level question

Cognitive Level

understand

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