Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Market failure
B
Increased profits for producers
C
Reduced demand for goods
D
Improved product quality
Understanding the Answer
Let's break down why this is correct
Answer
Positive externalities in production create benefits for society that go beyond the direct profits of a business. For example, if a company invests in renewable energy, it not only profits but also helps reduce pollution and improve air quality for everyone. In contrast, negative externalities in production lead to harmful effects on society. An example of this is a factory that releases smoke into the air; while it may generate income, it also harms the health of nearby residents. Therefore, just as positive externalities result in societal benefits, negative externalities produce societal costs that can affect people and the environment negatively.
Detailed Explanation
Negative externalities can cause market failure. Other options are incorrect because Some might think that negative effects help producers earn more; It seems like negative effects would lower demand.
Key Concepts
Positive Externalities
Negative Externalities
Market Efficiency
Topic
Positive Externalities in Production
Difficulty
easy 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.