Which activity generates a negative externality?
A) You buy a new car,then discover it needs a new transmission.
B) Your next-door neighbour mows the lawn at 6 A.M.
C) The only two coffee shops in town conspire to raise prices.
D) After Jane buys life insurance,she begins racing motorcycles on the weekends.

Question

Quizplus · Accepted Answer

The noise from the lawn mower in the early morning could disturb the sleep of neighbors, generating a negative externality. Option A is a personal cost, option C is an example of collusion in a market, and option D is an example of a personal choice that does not directly affect others.

Which Activity Generates a Negative Externality