Which example illustrates the concept of a negative externality?
A) a college professor loses a vigorous game of racquetball using the racquet he recently purchased
B) a flood wipes out a farmer’s entire corn crop
C) a college student plays his new sound system in the residence at 2:00 a.m
D) a janitor eats fast-food during his lunch break

Question

Quizplus · Accepted Answer

Playing a sound system at 2:00 a.m is a classic example of a negative externality as it affects the well-being of others (in this case, the other students in the residence) without compensation. The noise pollution is a negative spillover effect of the college student's actions. The other options are not examples of negative externalities as they do not involve harming bystanders or the environment.

Which Example Illustrates the Concept of a Negative Externality