Positive externalities are created when
A) other consumers reduce their demand for coffee and price thereby declines.
B) farmers spray pesticide in their fields and it washes into the local river after the first rainstorm.
C) your neighbor plants beautiful trees and flowers in her yard.
D) you purchase the "Mona Lisa" and lock it in a vault.

Question

Quizplus · Accepted Answer

The scenario described in choice C is an example of positive externalities. The neighbor's action of planting beautiful trees and flowers in her yard has a positive impact on the surrounding community, even though she may not receive any direct benefit from it. The community benefits by having an improved aesthetic appeal, which may increase the value of surrounding properties and promote a sense of well-being among residents.

Positive Externalities Are Created When