Which of the following is an example of a negative externality?
A) Loud music from a neighbor's party
B) Improved water quality from oyster farming
C) People getting flu shots during flu season
D) All of these are examples of negative externalities.

Question

Quizplus · Accepted Answer

A negative externality is a cost imposed on a third party as a result of an economic transaction. In this case, the loud music from a neighbor's party imposes a cost (discomfort, disruption of sleep, etc.) on other residents in the neighborhood who are not attendees of the party, making it an example of a negative externality. Improved water quality from oyster farming (B) and people getting flu shots during flu season (C) are not negative externalities as they do not impose costs on third parties.

Which of the Following Is an Example of a Negative