Question

Lila shares a house with two other people. She is a concert pianist and often practices at home. One roommate enjoys listening to her practice, but the other does not. For the roommate who enjoys listening to Lila play, this is an example of ________; for the other roommate, it is an example of ________.

Answer 1

Answer:    Positive externality, negative externality

Explanation:   Positive externality occurs when the production of a good in any sense, economic, artistic, educational, also benefits another, a so-called third party. For example, when Lily plays the piano for practice and her own development and advancement, the roommate who enjoys listening also benefits from it. It should be noted that this positive externality is not only limited to the roommate who enjoys listening to Lila's music, but also to the benefit of the wider community.

When it comes to negative externality, the case is reversed, someone else i.e. a third party suffers because of, in this case, Lila's music playing. This also applies to other areas, such as economics, and can also have an impact on the wider community.