{"id":221095,"date":"2025-05-29T07:27:12","date_gmt":"2025-05-29T07:27:12","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=221095"},"modified":"2025-05-29T07:27:15","modified_gmt":"2025-05-29T07:27:15","slug":"which-of-the-following-would-result-in-a-positive-externality","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/29\/which-of-the-following-would-result-in-a-positive-externality\/","title":{"rendered":"Which of the following would result in a positive externality"},"content":{"rendered":"\n<p>Which of the following would result in a positive externality?<\/p>\n\n\n\n<p>A) A local government establishes a price ceiling on rental apartments.<\/p>\n\n\n\n<p>B) An electric utility burns coal that causes acid rain.<\/p>\n\n\n\n<p>C) Medical research results in a cure for malaria.<\/p>\n\n\n\n<p>D) McDonald\u2019s adds new fat-free items to its menu.<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-1-color\">The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n<p><strong>Correct Answer: C) Medical research results in a cure for malaria.<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation:<\/h3>\n\n\n\n<p>A <strong>positive externality<\/strong> occurs when a third party\u2014someone not directly involved in a transaction or activity\u2014benefits from it without paying for that benefit. In economics, this represents a market failure because the full social benefits of the activity are not reflected in market prices. As a result, positive externalities often lead to underproduction or underinvestment in those activities from a purely private market perspective.<\/p>\n\n\n\n<p><strong>Option C<\/strong>, &#8220;Medical research results in a cure for malaria,&#8221; is a clear example of a positive externality. When medical researchers develop a cure for malaria, not only do the patients who receive the treatment benefit, but society at large also experiences advantages. These include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Reduced transmission of the disease.<\/li>\n\n\n\n<li>Lower healthcare costs for governments and individuals.<\/li>\n\n\n\n<li>Increased economic productivity as healthier people can work more effectively.<\/li>\n\n\n\n<li>Enhanced public health outcomes, especially in malaria-prone regions.<\/li>\n<\/ul>\n\n\n\n<p>Because these benefits spill over to people who were not directly involved in or paying for the medical research, they qualify as a positive externality.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p>Let&#8217;s briefly consider why the other options are incorrect:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>A)<\/strong> A price ceiling on rental apartments may lead to housing shortages and market inefficiencies, but it does not generate external benefits to third parties.<\/li>\n\n\n\n<li><strong>B)<\/strong> Coal burning causing acid rain is a <strong>negative externality<\/strong> because it harms the environment and public health, imposing unaccounted-for costs on society.<\/li>\n\n\n\n<li><strong>D)<\/strong> McDonald&#8217;s adding fat-free menu items is a business decision responding to consumer demand. While it may improve individual health outcomes, the broader societal benefit is limited and indirect, making it less clearly a positive externality compared to medical breakthroughs.<\/li>\n<\/ul>\n\n\n\n<p>Thus, <strong>Option C<\/strong> best illustrates a situation where the benefits extend beyond the immediate participants, fulfilling the definition of a positive externality.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/learnexams.com\/blog\/wp-content\/uploads\/2025\/05\/learnexams-banner8-72.jpeg\" alt=\"\" class=\"wp-image-221097\"\/><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Which of the following would result in a positive externality? A) A local government establishes a price ceiling on rental apartments. B) An electric utility burns coal that causes acid rain. C) Medical research results in a cure for malaria. D) McDonald\u2019s adds new fat-free items to its menu. The Correct Answer and Explanation is: [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-221095","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/221095","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=221095"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/221095\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=221095"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=221095"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=221095"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}