Question

Many individuals (third parties) in a society encounter ___________ externalities from a student’s college education that is strongly subsidized by the taxpayers..
A. positive
B. negative
C. extreme
D. floating

Answer 1

Answer:

The correct answer is the option A: positive.

Explanation:

First of all, the term of externality, in the field of economics, refers to the cost or benefit that a third party receives from the interaction of other two parties that established relations between them. This concept allegates that the interaction between the two main parties creates a consequence that affects the third party, that consequence could be a cost or a benefit and that is, negative or positive.

Secondly, a positive externality is the benefit that a third party receives from the interaction between two main parties.

Finally, in that case where many individuals have a benefit regarding the education strongly subsidized by the taxpayers is a commonly case of positive externality.