Question

Externalities can play an important role in determining a property's price, either by adding value through positive externalities or by diminishing value through negative externalities. Which of the following is most likely to be considered a negative externality?

A. Nearby parks and recreation facilities.
B. Quality neighborhood schools.
C. Public assistance facilities such as homeless shelters.
D. Well-kept landscapes.

Answer 1

Public assistance facilities such as homeless shelters is most likely to be considered a negative externality.

Option C

Explanation:

A negative externality is the expense of an economic transaction to a third party. In the deal, the first and second partners are the seller and the customer, and service providers are any entity, association, owner or property indirectly involved.

The aim of the Public Assistance (PA) project is to facilitate the rehabilitation of communities from major incidents, by giving them help to clear rubble, to save lives and to rebuild public infrastructures. Eligibility for approval is provided to local governments, counties, tribes and territories.