Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
An individual choosing to purchase a hybrid vehicle, reducing pollution and benefiting the community's air quality.
B
A firm investing in employee training, resulting in higher wages for workers but no impact on the local economy.
C
A family renovating their home, increasing property values for neighbors without government intervention.
D
A person buying a lottery ticket, which contributes to state-funded programs but has no direct benefit to the buyer.
Understanding the Answer
Let's break down why this is correct
Answer
A positive externality in consumption occurs when someone’s consumption of a good or service benefits others without them paying for it. For example, consider a person who plants a beautiful garden in their front yard. This garden not only enhances the person's enjoyment but also makes the neighborhood more attractive, which can increase property values and improve the community's overall happiness. In behavioral economics, people might be more likely to plant gardens if they understand how their actions can positively impact their neighbors, leading to a greater sense of community. Thus, the garden serves as a simple example of how individual choices can create broader benefits for society.
Detailed Explanation
When someone buys a hybrid vehicle, they help reduce pollution. Other options are incorrect because This option suggests that training workers only helps them, not the community; Renovating a home might raise nearby property values, but it doesn't help everyone directly.
Key Concepts
public goods
social welfare
behavioral economics.
Topic
Positive Externalities in Consumption
Difficulty
hard level question
Cognitive Level
understand
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