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.

Question

Quizplus · Accepted Answer

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.

Which Statement Describes a Positive Externality