Multiple Choice
Which of the following groups is least likely to experience difficulties with economic access to potable water?
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7. Externalities
Externalities: Social Benefits and Social Costs
Multiple Choice
Which of the following could lead to a positive externality on the international scale?
A
A country developing a new vaccine and sharing it globally
B
A firm dumping waste into a river that flows into neighboring countries
C
A government subsidizing domestic fossil fuel production
D
A nation imposing tariffs on imported goods
Verified step by step guidance1
Step 1: Understand the concept of a positive externality. A positive externality occurs when an action by an individual or country results in benefits to others who are not directly involved in the activity.
Step 2: Analyze each option to see if it creates benefits beyond the country taking the action. For example, developing a new vaccine and sharing it globally can improve health outcomes worldwide, benefiting other countries.
Step 3: Recognize that dumping waste into a river is a negative externality because it harms neighboring countries, not benefits them.
Step 4: Understand that subsidizing fossil fuel production typically encourages more pollution and does not create benefits for other countries, so it is not a positive externality.
Step 5: Note that imposing tariffs on imports is a protectionist policy that generally restricts trade and does not create external benefits internationally.
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