Question

Externalities Musashi 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:

b. This will generate a positive external.

Explanation:

The term "Externalities" may be defined as the benefit or the cost that is imposed by an individual or some parties on the third party who did not wish to incur the cost or the benefit.

Positive externalities are the externalities which exits when the production of goods benefits a third party.

In the context, Musashi plants various plants, shrubs, flowers and trees in his yard which benefits the society as they look good and beautifies the neighborhood. Thus it generates a positive external.