Pete throws leftover bread onto his front lawn because he enjoys watching the pigeons feeding. His neighbor John is not happy about the pigeons, since they leave a mess on his property. This is an example of:
A) a negative externality.
B) a public good.
C) privatization.
D) third-party benefits.
E) well-defined property rights.

Question

Quizplus · Accepted Answer

This scenario demonstrates a negative externality, where Pete's enjoyment of feeding the pigeons has negative effects on his neighbor John's property. The presence of pigeons is not factored into the cost-benefit analysis of Pete's actions, leading to an inefficient outcome.

Pete Throws Leftover Bread onto His Front Lawn Because He