What negative externality does leaded gasoline generate?

Leaded gasoline generates a negative externality primarily because it harms the health of consumers who do not use it. Negative externalities are costs that result from a transaction that affect third parties who are not directly involved in that transaction. In the case of leaded gasoline, the emissions from vehicles that use it contribute to air pollution, which can have detrimental effects on public health. Individuals who do not consume leaded gasoline can still suffer from the increased risk of health problems, including respiratory issues and other illnesses linked to exposure to lead and other harmful substances. This scenario illustrates how the production and consumption of leaded gasoline can have broader implications beyond just the immediate users, affecting the wider community and environment.

Additionally, the other options do not reflect negative externalities. Increased fuel efficiency and reduced vehicle emissions mitigate environmental impact rather than contribute to it, while the assertion that leaded gasoline only benefits car manufacturers does not acknowledge the health and environmental costs it imposes on society as a whole.