Asked by jimiesha archie on May 28, 2024
Verified
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 neighborhood.
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 neighborhood.
D) Liquid waste from Sam's chicken farm flows into a neighbor's well water.
Positive Externality
A beneficial effect experienced by a third party due to a transaction or activity they were not involved in.
Property Values
The worth of real estate as determined by market conditions and the property's condition, location, and other factors.
Renovates
The process of improving or updating a building, room, or structure to make it more attractive or functional.
- Identify positive externalities and examples of activities that generate them.
Verified Answer
JO
James OttomanelliMay 30, 2024
Final Answer :
C
Explanation :
A positive externality is a benefit that is enjoyed by a third party as a result of an economic transaction between two parties. In this case, Sam's renovation of his house increases the property values of all the houses in the neighborhood, providing a benefit to the other homeowners without any additional cost to them.
Learning Objectives
- Identify positive externalities and examples of activities that generate them.