Question

Jennifer is a serious student who works on schoolwork each evening. She has a roommate who likes to party and frequently hosts noisy get-togethers in their shared apartment without warning. Which of the following might be a likely outcome of this living situation?
A) Jennifer will experience negative externalities.
B) Jennifer will experience positive externalities.
C) Jennifer's roommate will experience positive externalities from living with Jennifer.
D) This scenario has nothing to do with externalities.

Answer 1

Answer:

A) Jennifer will experience negative externalities.

Explanation:

Externalities are essentially just the consequences of activities on unrelated third parties. There can either be positive or negative.

Jennifer being a serious student gives her a private benefit, but it also has a positive consequence for society as a whole (educational benefits). That would be considered a positive externality.

But with the question of the living situation - it would lead to a negative externality for Jennifer as the noise and distractions would negatively impact her studying.