An example of a negative externality is:
A)the benefit received when a neighbor installs a smoke detector.
B)the reduction in the profits of a company when there is a decrease in the demand for a product.
C)the loss of sleep when a neighbor throws a loud party on a weekend.
D)the change in the property values of neighbors' homes when the front yard of a house is landscaped.
E)the decrease in the demand for an inferior good when consumer income increases.

Question

Quizplus · Accepted Answer

The loss of sleep when a neighbor throws a loud party on a weekend is an example of a negative externality because it is an unintended cost imposed on others. The neighbor's actions are not taken with the intention of causing harm, but they have negative effects on those around them.

An Example of a Negative Externality Is