Externalities Quiz
• Is it:
a) Negative consumption externality
b) Positive consumption externality
c) Negative production externality
d) Positive production externality
A negative consumption externality is one
that leads to external costs. Smoking is a
consumption activity and results in costs
being imposed on those other than just the
people smoking (health costs etc). It is
therefore a negative consumption externality.
Externalities Quiz
• Is it:
a) Negative consumption externality
b) Positive consumption externality
c) Negative production externality
d) Positive production externality
This pollution is an external cost as
the cost is borne by people other
than the factory polluting. This
means that pollution is a negative
production externality.
Externalities Quiz
• Is it:
a) Negative consumption externality
b) Positive consumption externality
c) Negative production externality
d) Positive production externality
This attractive sculpture in
someone's garden will have
external benefits as other can
also enjoy it.
Externalities Quiz
• Is it:
a) Negative consumption externality
b) Positive consumption externality
c) Negative production externality
d) Positive production externality
A negative consumption externality
is one that leads to external costs.
The external costs here are arising
from the consumption activity of
buying and using cars for transport.
Externalities Quiz
• Is it:
a) Negative consumption externality
b) Positive consumption externality
c) Negative production externality
d) Positive production externality
The gasholder leads to an external
cost for this house (and people
passing by) and arises from a
production activity.
Externalities Quiz
• Is it:
a) Negative consumption externality
b) Positive consumption externality
c) Negative production externality
d) Positive production externality
Vaccination will lead to external
benefits as it will protect other
from catching diseases.