Economics (AS & A Level) · Oct / Nov 2021 · Paper 31 · Question 2
9708Private costs and benefits, externalities and social costs and benefits
What is an example of a negative externality?
- Athe non-provision of public goods by the market
- Bindirect taxation that fails to internalise the external cost
- Cmonopoly power leading to reduced output and a higher price
- Dthe production of a good that has a harmful effect on a third party
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Correct answer: D. the production of a good that has a harmful effect on a third party
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