A poorly cared-for neighborhood park that reduces the property values of nearby homes
is an example of a negative externality.

Question

A poorly cared-for neighborhood park that reduces the property values of nearby homes
 is an example of a negative externality.

Quizplus · Accepted Answer

A negative externality refers to a cost that is imposed on a third party as a result of an economic transaction. In this case, the poorly cared-for park is imposing a cost on nearby homeowners by reducing the value of their properties. This cost is not considered in the private transaction of the park's maintenance, making it an example of a negative externality.

A Poorly Cared-For Neighborhood Park That Reduces the Property Values