Use the following to answer questions :
Figure: City with Two Polluters
-Which statement describes a positive externality?
A) Sam dug a pond,so he could go fishing,but the pond has contributed to an explosion of mosquitoes in your neighbourhood.
B) Sam has dozens of cats,and they come into your yard to hunt the birds that come to your birdbath.
C) Sam buys a dilapidated house,renovates it,and increases the property values of all the houses in the neighbourhood.
D) Liquid waste from Sam's chicken farm flows into a neighbour's well water.

Question

Use the following to answer questions :
Figure: City with Two Polluters 
-Which statement describes a positive externality?
A) Sam dug a pond,so he could go fishing,but the pond has contributed to an explosion of mosquitoes in your neighbourhood. 
B) Sam has dozens of cats,and they come into your yard to hunt the birds that come to your birdbath. 
C) Sam buys a dilapidated house,renovates it,and increases the property values of all the houses in the neighbourhood. 
D) Liquid waste from Sam's chicken farm flows into a neighbour's well water.

Quizplus · Accepted Answer

A positive externality is an impact on a third party that benefits them. In this scenario, Sam's decision to renovate his house has increased the property values of all the houses in the neighbourhood, which benefits his neighbours.

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