In the context of externalities, which sector is most likely to experience greater job losses due to technological changes that generate negative social costs?

• A. Education
• B. Healthcare
• C. Hospitality
• D. Manufacturing

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of externalities, which are costs or benefits of economic activities that affect third parties and are not reflected in market prices. Negative externalities impose additional social costs beyond private costs.
2. Step 2: Recognize that technological changes generating negative social costs often lead to increased production efficiency but can also cause job losses in sectors where these externalities are significant.
3. Step 3: Analyze the sectors listed (Education, Healthcare, Hospitality) and consider their typical exposure to negative externalities and technological disruption. These sectors generally have lower negative externalities and are less prone to job losses from such technological changes.
4. Step 4: Identify Manufacturing as a sector that often experiences significant negative externalities (e.g., pollution) and is highly susceptible to automation and technological improvements that reduce labor demand, leading to greater job losses.
5. Step 5: Conclude that due to the combination of negative social costs and technological advancements, Manufacturing is the sector most likely to experience greater job losses compared to Education, Healthcare, or Hospitality.