Answer to Question #48109 in Other Economics for Billy
Which of the following provides an example of an externality?
The air pollution generated when you drive your car.or
The view that passersby and neighbors enjoy when observing your Halloween decorations.or
The free concerts neighbors hear when an accomplished musician practices at home.or
All of the above.
First of all it is necessary to define the concept of an externality. An externality is a consequence of an economic activity that is experienced by unrelated third parties. In other words it occurs when an economic transaction causes a harmful or positive effect to a third party. So, an example of an externality is all of the above.