Microeconomics 20th Edition by McConnell, Sean Flynn, Stanley Brue

Exercise 6

Match each of the following characteristics or scenarios with either the term negative externality or the term positive externality.
a. Overallocation of resources.
b. Tammy installs a very nice front garden, raising the property values of all the other houses on her block.
c. Market demand curves are too far to the left (too low).
d. Underallocation of resources.
e. Water pollution from a factory forces neighbors to buy water purifiers.