External benefits as positive externalities

Steps:

• Define external benefit: Positive effect on third parties not directly involved in the activity, like reduced pollution or congestion from cycling vs. driving.
• Assess choices: Identify which option benefits others beyond the cyclist, excluding private gains or costs.
• Eliminate non-external options: Rule out individual-focused benefits (B, C) and costs (A).
• Select matching option: Choose the one aiding other road users.

Why D is correct:

• Reduced congestion benefits other drivers and cyclists as third parties, exemplifying a positive externality per economic definition where social benefits exceed private ones.

Why the others are wrong:

• A: Higher cycle lane costs represent a societal expense, not a benefit.
• B: Improved fitness is a private benefit to the cyclist only.
• C: Lower cycling costs are a private saving for the individual.

Final answer: D