Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A person plays loud music at a party, disturbing neighbors.
B
A consumer purchases an eco-friendly car, reducing emissions.
C
A restaurant offers a discount that attracts more customers.
D
A family buys a new home in a quiet neighborhood.
Understanding the Answer
Let's break down why this is correct
Answer
A negative externality in consumption happens when someone’s consumption of a good or service negatively affects others who are not involved in that transaction. For example, imagine a person who smokes cigarettes in a crowded park. While they enjoy their cigarette, the smoke can harm the health of those nearby, who did not choose to be around the smoke. This situation illustrates a negative externality because the smoker’s choice creates an unwanted effect on others, leading to potential health issues for non-smokers. Therefore, the enjoyment of smoking has a cost that is unfairly passed on to others in the environment.
Detailed Explanation
When someone plays loud music, it bothers the neighbors. Other options are incorrect because Buying an eco-friendly car helps the environment; Offering discounts brings in more customers, which can be good for business.
Key Concepts
Negative Externalities in Consumption
Marginal Social Cost vs. Marginal Private Benefit
Government Intervention
Topic
Negative Externalities in Consumption
Difficulty
easy level question
Cognitive Level
understand
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