Which of the following is an example of a negative externality?
A) the benefit you receive when your neighbour installs a smoke detector
B) the reduction in profits for your company that occurs when there is a decrease in consumer demand for the product you manufacture
C) the change in the property values of your neighbours' homes when you paint your house and landscape your front yard
D) the sleep you lose when your neighbour throws a loud party next door that keeps you awake

Question

Quizplus · Accepted Answer

A negative externality occurs when a third party is harmed by the actions of others. In this case, the loud party next door is causing harm to the sleep of the person who is not attending the party.

Which of the Following Is an Example of a Negative