Question

Standing in line at a small-town grocery store gives people a chance to socialize. Is this a positive externality associated with the act of shopping? Why or why not?
a. Yes, because chatting with others is not inherently part of buying groceries
b. No, because the benefit is to the shoppers, not to third parties.
c. Yes, because in large cities such socializing would not occur.
d. No, because people can casily socialize elsewhere, as well.
e. Yes. because not every shopper is in a mood to talk.

Answer 1

Answer:

A. Yes, because chatting with others is not inherently part of buying groceries

Explanation:

When a third party benefits from the transaction between two parties its is known as economic transaction. For example when the parents pay for college education for their children, school and the parents are not the only beneficiaries , it is also beneficial for the society as the student would become a good citizen and that would solve many social problems itself.

Standing in line at small town grocery store gives the people chance to socialise. It is part of positive externality because chatting with others is not inherently part of buying groceries, it is an extra benefit for the buyers.