Question

1. a factory that dumps waste into a towns water supply is an example of a ______ externality.

real
postive
negative
none of the above

Explanation:

An externality is a cost or benefit imposed on third parties not involved in a transaction. A factory dumping waste into a town’s water supply harms residents (third parties) by polluting their water, which is a harmful effect. This fits the definition of a negative externality.

Answer:

negative