Question

Suppose your neighbor enjoys seeing the grass in his yard grow wild and free, a practice with which you disagree. This is an example of a: negative production externality and a negative consumption externality. negative production externality. positive production externality. positive consumption externality. negative consumption externality.

Answer 1

negative consumption externality.

Step-by-step explanation:

A negative externality arises when the production or consumption of a finished product or service has negative impact (cost) on a third party.

On the other hand, a positive externality arises when the production or consumption of a finished product or service has a significant impact or benefits to a third party that isn't directly involved in the transaction.

In this scenario, your neighbor enjoys seeing the grass in his yard grow wild and free, a practice with which you disagree because it poses a danger on the people around as snakes and other poisonous animals may breed or live there.

Hence, this is an example of a negative consumption externality because it's the potential of causing you harm or endangering your life.