Asked by Diadima Young on May 14, 2024
Verified
Which of the following is an example of a negative externality?
A) an increase in the value of land you own when a nearby development is completed
B) the costs paid by a company to build an automated factory
C) falling property values in a neighborhood where a disreputable nightclub is operating
D) the higher price you pay when you buy a heavily advertised product
Negative Externality
A situation where a third party suffers costs or harm as a result of an economic transaction between other parties, without compensation, such as pollution from a factory affecting nearby residents.
Property Values
The monetary worth assigned to real estate, determined by various factors including location, size, and condition of the property.
- Recognize examples of negative and positive externalities in various contexts.
Verified Answer
TB
Tania BarbosaMay 15, 2024
Final Answer :
C
Explanation :
Falling property values in a neighborhood due to a disreputable nightclub is an example of a negative externality as it negatively affects people who live in the area even though they are not associated with the nightclub.
Learning Objectives
- Recognize examples of negative and positive externalities in various contexts.