Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A company develops a new technology that ultimately reduces production costs for all firms in the industry.
B
A factory pollutes the air, affecting the health of nearby residents.
C
A firm invests in employee training that only benefits its own workers.
D
A business achieves higher profits through a monopoly.
Understanding the Answer
Let's break down why this is correct
Answer
A positive externality in production occurs when a company’s actions benefit others who are not directly involved in the business. For example, if a tech company develops a new software that improves efficiency, other businesses that use this software can also benefit from increased productivity without paying for the innovation directly. This means the tech company’s work not only helps itself but also helps other companies grow and succeed. A concrete example is when a farmer uses new sustainable farming techniques that not only increase their crop yield but also improve soil quality in the surrounding area, benefiting neighboring farms. This shows how one company's innovation can positively impact the wider community.
Detailed Explanation
When a company creates new technology that lowers costs, it helps all businesses in that industry. Other options are incorrect because This option shows a negative effect; This choice only helps the company's workers.
Key Concepts
innovation
Topic
Positive Externalities in Production
Difficulty
easy level question
Cognitive Level
understand
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