Which of the following is an example of an externality?
A)Zima purchases a new pants suit.
B)Malik's bird chirps loudly during the night, waking his neighbors.
C)Roberto sells a book to Kevin, who uses the book and then gives it to Lee as a gift.
D)Kalene watches a scary movie.

Question

Quizplus · Accepted Answer

An externality occurs when a third party not directly involved in a transaction is affected. Malik's bird chirping and waking his neighbors is an example of a negative externality because the neighbors are affected without being a part of the decision to have a bird.

Which of the Following Is an Example of an Externality