📚 Learning Guide
Negative Externalities in Consumption
medium

Which of the following statements accurately describe the implications of negative externalities in consumption, particularly in the context of homeowners planting trees? Select all that apply.

Master this concept with our detailed explanation and step-by-step learning approach

Learning Path
Learning Path

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

Choose the Best Answer

A

Homeowners planting trees do not consider the cleanup costs imposed on their neighbors.

B

The market equilibrium quantity of trees is socially optimal for all parties involved.

C

Negative externalities can lead to an over-allocation of resources to activities that generate them.

D

Government intervention may be necessary to correct for the inefficiencies caused by negative externalities.

E

Neighbors benefit from the shade and aesthetic appeal of the trees, which offsets the cleanup costs.

Understanding the Answer

Let's break down why this is correct

Answer

Negative externalities in consumption occur when the actions of one person affect others in a way that is not reflected in market prices. For example, when homeowners plant trees, they may benefit from the shade and beauty, but this can also affect their neighbors by blocking sunlight or views. This means that the positive effects of planting trees for one homeowner can lead to negative experiences for others, which is an externality. As a result, homeowners might not consider these impacts when deciding to plant trees, leading to decisions that could harm their community's overall enjoyment and property values. Understanding these implications helps encourage homeowners to think about how their choices affect their neighbors, promoting better community planning and cooperation.

Detailed Explanation

All the statements misunderstand how negative externalities work. Other options are incorrect because This suggests homeowners ignore their neighbors' costs; This implies that the number of trees is perfect for everyone.

Key Concepts

Negative Externalities
Market Failure
Government Intervention
Topic

Negative Externalities in Consumption

Difficulty

medium level question

Cognitive Level

understand

Ready to Master More Topics?

Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.