Explain what is meant by a negative externality and give an example of a negative externality that arises from fuel consumption.

A negative externality is a spillover cost affecting a third party from an economic transaction.A negative externality that arises from fuel consumption is the air pollution affecting the health of the population. Air pollution can cause illness such as asthma which then becomes a burden on the taxpayer. Other examples you could have used include: CO2, noise pollution, non-renewable resource depletion.

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