Answer:
What do pollution, education, and your neighbor's dog have in common?
No, that's not a trick question. All three are actually examples of economic transactions that include externalities.
When markets are functioning well, all the costs and benefits of a transaction for a good or service are absorbed by the buyer and seller. For example, when you buy a doughnut at the store, it's reasonable to assume all the costs and benefits of the transaction are contained between the seller and you, the buyer. However, sometimes, costs or benefits may spill over to a third party not directly involved in the transaction. These spillover costs and benefits are called externalities. A negative externality occurs when a cost spills over. A positive externality occurs when a benefit spills over. So, externalities occur when some of the costs or benefits of a transaction fall on someone other than the producer or the consumer.
Explanation:
<span>Assuming that this is referring to the same list of options that was posted before with this question, <span>the correct response would be the "state legislature", since states have their own legislative bodies much like the federal government. </span></span>
It would be "C. too much defense spending" that is believed to have played a role in the collapse of the Soviet Union, since the Soviet Union operated under a "command economy," in which the government dictated production.
