Which of the following is an example of an externality?
A) Annie purchases a handbag.
B) Bob's dog barks loudly during the night waking his neighbors.
C) Clark sells a book to Calvin.
D) David watches a scary movie.

Question

Quizplus · Accepted Answer

Bob's dog barking loudly at night creates a negative impact on his neighbors who are affected by the noise, which is an example of a negative externality.

A, C, and D do not involve any externality - Annie purchasing a handbag, Clark selling a book to Calvin, and David watching a scary movie have no impact on any third party.

Which of the Following Is an Example of an Externality