Question

question
your neighbor paints his house a hideous color. is this an example of a negative externality or a positive externality?
select the correct answer below:
negative externality
positive externality
both a positive and negative externality
neither a positive nor a negative externality
content attribution

Explanation:

A negative externality occurs when a third - party incurs a cost due to an economic activity. Here, the neighbor's choice of a "hideous color" likely imposes an aesthetic cost (a form of non - monetary cost) on others in the neighborhood (the third - parties). A positive externality would be if the action benefited the third - parties. Since there is no indication of a benefit and a clear indication of an unwanted (costly in terms of aesthetics) situation for others, it is a negative externality.

Answer:

negative externality