Question

question 12 (1 point)
suppose that large-scale pork production has the potential to create ground water pollution. why might this type of pollution be considered an externality?
the groundwater pollution reduces the cost of large-scale pork production.
the economic impact of a large-scale facility is localized in a small geographic area.
consumers will not reap the benefits of lower production costs from a large-scale facility.
the pollution has the potential for creating a health risk for water users in the region surrounding the pork production facility.

Explanation:

An externality occurs when a production or consumption activity affects a third - party not directly involved in the activity. In this case, groundwater pollution from pork production affects water users (third - parties) in the surrounding region, creating a health risk for them. This is an example of a negative externality.

• The first option is incorrect because if groundwater pollution reduced production costs, it would be a private cost - saving (not an externality).
• The second option about economic impact being localized does not relate to the concept of externality (which is about impacts on non - participants).
• The third option about consumers not reaping benefits is not relevant to the definition of an externality.

Answer:

The pollution has the potential for creating a health risk for water users in the region surrounding the pork production facility.