Which of the following illustrates the concept of a negative externality?
A)A college professor plays a vigorous game of racquet ball with the racquet she recently purchased.
B)You experience a decrease in your property value from neglecting your lawn and garden.
C)Your neighbor plays loud music that you dislike through stereo speakers set up on his deck.
D)A drought causes a poor crop for farmer's blueberry fields.

Question

Quizplus · Accepted Answer

Negative externality occurs when an individual or firm's actions cause a negative effect on a third party. In choice C, the neighbor playing loud music creates a disturbance for others without bearing the full cost of their action, exemplifying a negative externality.

Which of the Following Illustrates the Concept of a Negative