📚 Learning Guide
Negative Externalities in Consumption
easy

Negative externalities in consumption are to social costs as private benefits are to what?

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Choose the Best Answer

A

Private costs

B

Societal benefits

C

Market equilibrium

D

Government interventions

Understanding the Answer

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Answer

Negative externalities in consumption occur when a person's consumption of a good or service imposes costs on others who are not involved in that transaction. For example, if someone smokes in a public space, the smoke can harm the health of nearby non-smokers, creating a social cost that is not reflected in the price of cigarettes. In this context, private benefits, which are the advantages enjoyed by the consumer, are compared to social benefits. Social benefits include not just what the consumer gains but also the positive effects on society as a whole. So, just as negative externalities lead to social costs, private benefits correspond to social benefits, highlighting the difference between individual gains and the wider impact on the community.

Detailed Explanation

Private benefits are what a person gains from a choice. Other options are incorrect because Some might think societal benefits are linked to private benefits; Market equilibrium is about supply and demand balancing.

Key Concepts

Negative Externalities in Consumption
Marginal Social Benefit vs. Marginal Private Benefit
Government Interventions
Topic

Negative Externalities in Consumption

Difficulty

easy level question

Cognitive Level

understand

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