Final answer:
Using a leaf blower early on a Sunday morning generates a negative externality, as the noise imposes costs on the neighbors who are not compensated. This activity disrupts peace and may require regulation to address the externality.
Step-by-step explanation:
The situation that probably would generate a negative externality is using a leaf blower on your yard early on a Sunday morning. Negative externalities occur when a third party, who is not directly involved in a transaction, suffers a cost as a result of that transaction. In our example, while the person using the leaf blower gains clean yard, the noise created by the leaf blower imposes costs on the neighbors in the form of disrupted sleep or peaceful enjoyment of their property. This is an economic cost that they have not chosen, and they are not compensated for the inconvenience.
Negative externalities may require government intervention to regulate or tax such activities in order to reduce the externality. Positive externalities, conversely, occur when third parties benefit from an activity they are not directly involved in, such as when investments in private education raise a country's standard of living.