Final answer:
Cigarette smoking and a fireworks display are examples of goods or services with negative externalities. These activities impose harmful effects on third parties, like health issues from secondhand smoke and noise pollution from fireworks. Positive externalities, such as the enjoyment a bird watcher gets from a neighbor's bird-friendly yard, differ as they have beneficial spillover effects.
Step-by-step explanation:
An example of a good or service having the effects of a negative externality is cigarette smoking and a fireworks display. Negative externalities occur when the consumption or production of a good causes a harmful effect to a third party. In the case of cigarette smoking, non-smokers can be exposed to secondhand smoke, which can have health consequences. Fireworks, while celebrated for their display, can cause noise pollution and potential harm to pets and wildlife. Both of these lead to external costs not reflected in the market price of the goods or services.
A negative externality in production could be a steel manufacturing firm that pollutes the air, causing increased costs for a nearby laundry firm due to the dirt and smoke produced. On the other hand, externalities can also be positive. For example, the planting of birdhouses and flowers by your neighbor that attracts birds can be a positive externality if you enjoy bird watching.