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Education spending creates knowledge benefits for people who do not directly pay for them. What does this show?

Answer and explanation

Correct answer: Positive externality

The governing concept is a positive externality: an activity creates benefits for third parties who are not involved in the original transaction. Education benefits the student privately, but a more skilled, informed and healthier population can benefit others as well. Therefore, option C is correct. Option B describes spillover harm, option D is a redistribution payment, and option A concerns spending that offsets damage.

Related tags

EducationPositive ExternalitySocial BenefitGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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