Which of the following is an example of a good or service having the effects of a positive externality?

A. Medical research. B. Education. C. A Big Mac. D. Pollution. E. Both a and b

Option E

Explanation:

Positive externality refers to an economic activity gain gained by a unrelated third party. Whereas persons who gain from positive externalities through charging are called free-riders, encouraging free-riders to purchase products that produce significant external rewards might be in the favor of the public.

Most commodities produce positive environmental costs that are not accounted for by the recipients. Private insurance for infectious diseases, for instance, provides a significant advantage to someone with services, for which they can not bill.