📚 Learning Guide
Negative Externalities in Consumption
medium

Arrange the following steps in the correct order to illustrate the impact of negative externalities in consumption related to tree planting by homeowners: A) Neighbors experience increased costs due to fallen leaves, B) Homeowners plant trees, C) Market equilibrium quantity of trees is higher than the socially optimal quantity, D) Potential government interventions are considered to address the issue.

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Learning Path

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Choose the Best Answer

A

B → A → C → D

B

B → C → A → D

C

A → B → D → C

D

C → A → B → D

Understanding the Answer

Let's break down why this is correct

Answer

To understand the impact of negative externalities in tree planting, we start with homeowners planting trees, which is step B. As these trees grow, they provide benefits but also create problems, such as fallen leaves that neighbors must clean up, which relates to step A. Because many homeowners plant trees without considering the costs to their neighbors, the market equilibrium quantity of trees becomes higher than what is socially optimal, represented by step C. This situation leads to the consideration of potential government interventions to help balance the benefits and costs, which is step D. Overall, this process shows how individual actions can have wider effects on the community.

Detailed Explanation

First, homeowners plant trees. Other options are incorrect because This option suggests that the market quantity is considered before neighbors are affected; This order puts the neighbors' costs before planting trees.

Key Concepts

Negative Externalities
Market Failure
Government Intervention
Topic

Negative Externalities in Consumption

Difficulty

medium level question

Cognitive Level

understand

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