Answer to Question #48107 in Economics for Billy

Question

Which of the following activities represents a positive externality?

The benefit to a consumer from watching a film on DVD.or

An increase in quantity demanded for your product when you put it on sale. or

The increase in the value of property belonging to your neighbors when you hire a landscaper to maintain your front yard. or

All of the above.

Answer 1

First of all it is necessary to define the concept of positive externality. Positive externality is a Positive effect or benefit realized by a third party resulting from a transaction in which they had no direct involvement. In other words it is a benefit that is enjoyed by a third-party as a result of an economic transaction.
So, the example of positive externality is the increase in the value of property belonging to your neighbors when you hire a landscaper to maintain your front yard.