Question

Gilberto plants a variety of trees, shrubs, and flowers in his yard. The landscaping beautifies the neighborhood. Which of the following is true?
(A) The cost to Gilberto of planting is a negative externality.
(B) This will generate a positive external.
(C) This will not generate any externalities.

Answer 1

Answer:

Gilberto plants a variety of trees, shrubs, and flowers in his yard. The landscaping beautifies the neighborhood. Due to this, a positive external will be generated.

Explanation:

So basically Gilberto's planting is creating positive externality because negative externality is when the third party gets negatively affected by production or consumption. Production or Consumption of something, whether third party is directly or indirectly involved.

An example to explain this is smoking cigarettes, a person when smokes not only causes harm to his body but also other people who might not be related to him by passive smoking and also by causing air pollution. But when it comes to planting it is not possible for it to not generate any externality. In fact, it generates positive externality by contributing to the environment.