Question

Which of the following generate the type of externality previously described? Check all that apply. The city where you live has granted a permit to put a movie theater in your neighborhood, causing traffic jams at night and on weekends. A microbiology lab has published its breakthrough in swine flu research. Your roommate Jacques has bought a bird that keeps you up at night with its chirping. Darnell has planted several trees in his backyard that increase the beauty of the neighborhood, especially during the fall foliage season.

Answer 1

Answer:

Explanation:

There are two types of externality:

1. Postive externality

2. Negative externality

Postive externality is when the benefits of economic activities to third parties exceeds the costs. An example of an activity that generates positive externality is research.

Activities that generate positive externality are usually under produced in the economy. For this reason, the government usually gives subsidy to encourage its production.

Negative externality is when the cost of activities to third parties not involved in the activity is greater than its benefit. An example of an activity that generates negative externality is pollution. Activities that generate negative externality are usually over produced in the economy, so, the government imposes tax on such activities in order to reduce its production.

In the above question, the following activities generate positive externality:

1. A microbiology lab has published its breakthrough in swine flu research

2. Darnell has planted several trees in his backyard that increase the beauty of the neighborhood, especially during the fall foliage season.

In the above question, the following activities generate negative externality:

1. The city where you live has granted a permit to put a movie theater in your neighborhood, causing traffic jams at night and on weekends

2. Your roommate Jacques has bought a bird that keeps you up at night with its chirping

I hope my answer helps you