When your neighbor's dog barks all night long, this is an example of a negative externality.

Question

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A negative externality is a cost that is suffered by a third party as a result of an economic transaction. In this case, the neighbor's dog barking all night long causes a disturbance to other people who are not involved in the transaction (the owner and the dog). Therefore, it is an example of a negative externality.

When Your Neighbor's Dog Barks All Night Long, This Is