The productivity of the employees of a bakery is reduced because of the excessive noise coming from a next door car repair shop.This is an example of
A) synergy.
B) a positive externality.
C) a negative externality.
D) happy coexistence.

Question

Quizplus · Accepted Answer

This situation is an example of a negative externality because the noise from the car repair shop is negatively affecting the productivity of the bakery employees without compensation. A negative externality occurs when the actions of one party have negative effects on another party who is not involved in the transaction.)

The Productivity of the Employees of a Bakery Is Reduced