Which of the following is an example of a positive externality?
Answer and explanation
Correct answer: Spread of knowledge in society through education
A positive externality occurs when an activity gives benefits to people who are not fully involved in the transaction. Education benefits the student directly, but educated people can also share knowledge, improve cooperation and contribute to society. Thus, the social benefit exceeds the private benefit. Pollution examples create harmful, or negative, externalities, so option C is correct.
Frequently asked questions
What is the correct answer to this question?
Spread of knowledge in society through education
Why is this the correct answer?
A positive externality occurs when an activity gives benefits to people who are not fully involved in the transaction. Education benefits the student directly, but educated people can also share knowledge, improve cooperation and contribute to society. Thus, the social benefit exceeds the private benefit. Pollution examples create harmful, or negative, externalities, so option C is correct.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
