Josiah installed a metal sculpture in his front yard. A negative externality arises if the sculpture
A)increases the value of other properties in the neighborhood.
B)decreases the value of Josiah's home.
C)is visually appealing to Josiah's neighbors.
D)creates a safety hazard for neighborhood children.

Question

​Josiah installed a metal sculpture in his front yard. A negative externality arises if the sculpture
A)​increases the value of other properties in the neighborhood.
B)​decreases the value of Josiah's home.
C)​is visually appealing to Josiah's neighbors.
D)​creates a safety hazard for neighborhood children.

Quizplus · Accepted Answer

A negative externality arises when the sculpture creates negative effects on others who are not involved in the decision to install it. If the metal sculpture creates a safety hazard for neighborhood children, then it is imposing a negative externality on the neighborhood. Options A, B, and C do not create negative effects and are not considered negative externalities.

​Josiah Installed a Metal Sculpture in His Front Yard

Josiah Installed a Metal Sculpture in His Front Yard