Chapter 75, Problem 4MCQ

To determine

The example of a source of external benefits

Answer to Problem 4MCQ

From the available options, the correct option is technology spillover.

Explanation of Solution

Traffic congestion and pollution are not external benefits but the external costs which are incurred by the third party when someone consume or produce products. And, taxes are the private costs and subsidies for polluters are the private benefits which cause external costs for the society.

Therefore, the correct option is technology spillover which will provide the technical benefits to the society as a whole or the third party who does not involve in the consumption or invention of that technology.

Economics Concept Introduction

Introduction: The benefits which are obtained by the third party who is not actually buying, selling, or consuming the good are called external benefits such as using a vehicle to travel that reduces the congestion on the road because it provides benefit to other drivers so that they can drive quickly and safely.