Question

Which of the following is an example of a negative externality? Your new sweater fades after the first wash. Your English Literature teacher adores her new pen. Your neighbor’s new heating system is not working properly. Your father is fed up with his new lawn mower which won’t start. Your sounding the horn on your new BMW sport car that wakes up the entire neighborhood.

Answer 1

Your new sweater being faded after the first wash, this is because an externality is (roughly) defined as an occurrence without intention. The BMW car is also near an externality however honking a horn is a purposeful act and therefore cannot be define as an externality.