Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A farmer who grows crops that provide habitat for local wildlife
B
A factory that pollutes the air during its manufacturing process
C
An oil company that spills oil into the ocean
D
A restaurant that increases traffic congestion in its area
Understanding the Answer
Let's break down why this is correct
Answer
A positive externality in production happens when a business creates benefits for others that are not part of the direct transaction. For example, if a company plants trees as part of its factory landscaping, the trees not only improve the company's appearance but also provide clean air and shade for the surrounding community. This benefit is not paid for by the community, yet they enjoy the cleaner environment and cooler temperatures. In this case, the company’s action has a positive impact on people who are not directly involved with the company. Thus, the trees represent a positive externality because they create additional value for society beyond the company’s own interests.
Detailed Explanation
When a farmer grows crops, they can create a home for animals. Other options are incorrect because Some might think that factories help by making products; An oil spill seems bad for the ocean, which is true.
Key Concepts
production
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.