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Which situation would indicate the presence of an externality? Producers' actions cause a shortage of a particular good. Private motorists contribute to traffic congestion in

  1. Which situation would indicate the presence of an externality?
  • Producers' actions cause a shortage of a particular good.
  • Private motorists contribute to traffic congestion in city centres.
  • Differences in ability cause inequality in the distribution of income in an economy.
  • Increased demand for a good by the rich raises its price for poorer consumers.

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