Lesson eLearning

A community installs rooftop solar panels on its houses, which reduces the need for coal‑based electricity and thereby lowers air pollution for the whole neighbourhood. This situation is an example of:

medium MCQ 2 marks Class 12 · Economics · Environment and Sustainable Development
  1. Negative externality
  2. Positive externality
  3. Common property resource
  4. Public good
Answer
Positive externality

The correct answer is Positive externality — Select the option that describes a positive externality.

Step-by-step solution

  1. Recognise that the action (solar panels) provides a benefit to people who are not directly involved.
  2. A benefit to third parties is a positive externality.
  3. Select the option that describes a positive externality.
Common mistake: Confusing the benefit with a negative externality

Concept tested: Positive externalities

Published · How this solution was prepared and checked

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