Explanation:

- Improved health and education often create benefits beyond the individuals directly involved.

- These benefits, like a healthier workforce or improved societal knowledge, positively impact the economy and society.

- Positive externality occurs when third parties benefit from a transaction or activity they are not directly involved in.

- Negative externality, conversely, involves third parties suffering owing to someone else's actions.

- Both a) and b) would mean there are simultaneous benefits and harms to third parties.

- None of the above implies neither positive nor negative externalities occur.

Correct Answer: Option 1 - Positive externality