Explain whether an external cost or an external benefit is created and identify an appropriate policy response.

Trees planted in urban areas improve air quality and lower summer temperatures.

Question

Explain whether an external cost or an external benefit is created and identify an appropriate policy response.

Trees planted in urban areas improve air quality and lower summer temperatures.

anonymous · Answer

This would be an external benefit.  Trees improving air quality is a good thing!  This is why we refer to it as a benefited.  The external part comes from the fact that people get to enjoy the air from the trees even if they didn't plant them!  Its "External" to the buying and selling of the tree.  Let me know if this helps @synkronize