Question

QUESTION 6 Durian is a fruit that is particularly popular in Singapore and Malaysia. Durian has a very strong smell, which many people dislike. As a result, the Singapore Mass Transit Authority bans people from carrying durians on Singapore's trains. 1. Transporting durians on the train has economic implications for passengers. 2. If the Singaporean Mass Transit Authority did not intervene then it is likely durians would continue to be transported on its trains. 3. The smell of durian is an example of a negative externality. Which of the above statements are true: Only 1 is true. Only 2 is true. Both 1 and 2 are true. Both 2 and 3 are true. All three are true.

i am sure that 2 and 3 are true but not sure if 1 is true

Answer 1

Durians has a very string smell due to which many people will not like. Now as many people will not like, it will make the environment very unpleasant for those people who do not like the smell. Due to unpleasant environment, negative externality will be created.

And negative externality creates the economic implication.

And it is also true that if Singapore Mass Transit Authority would not have intervene then people would have continue to carry the Durians on trains.

Hence, All three are true.