Problem

Identify whether the market supply curve will shi…

02:01

Problem 1 Medium Difficulty

Identify the following situations as an example of a negative or a positive externality:
a. You are a birder (bird watcher), and your neighbor has put up several birdhouses in the yard as well as planting trees and flowers that attract birds.
b. Your neighbor paints his house a hideous color.
c. Investments in private education raise your country's standard of living.
d. Trash dumped upstream flows downstream right past your home.
e. Your roommate is a smoker, but you are a nonsmoker.

Answer

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Principles of Microeconomics for AP® Courses

Chapter 12

Environmental Protection and Negative Externalities

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Video Transcript

Let's talk about positive and negative externalities because we know externalities artifacts that effect that their party that's not involved in the transaction or use of the product. Eso this Look at a You are a bird watchers and your neighbor has put up a warehouse in the yard. Well, here the action is that your neighbor has put up a bear house in upper house in the yards. Okay, uh, you being that their party here, there is a positive externality, right? You're You are happier because your neighbor has put up the spare house and his yard and he didn't do it for you. He did it for himself and again, the more birdhouses he puts, the more Burt's, The more happier you are because you like to watch these birds be your next door neighbor. Pains is has a horrible color. What that cost is a negative externality, right, Because this my decreased property value, you have to look at the house every day, and this is not a pleasant feeling. So it's causing a native externality to you and again, you being that their party because your next door neighbor painting his house, that's kind of the action. You were not part of that Interaction. See, investments in private. Indication of this has a huge positive externality. The more educated society is, the better it is for everyone else. Even though those people did not receive education themselves were private education themselves. It raises the standard of living for everyone and again the people who receive the proper medication. We're not part of the interaction between the students who did get this private education and that place in which they received this application. The trash from a factory flow sound string downstream right past your home, the action being that the company dumps its trash into the river. Right? Ah, you are their party. You were not part of the creation of that trash or its disposal. You were just a bystander. Uh, this has a negative. This is a negative externality. You're not happy that this trash is flowing down your home? Um so just for that reason, it is the negative. Externality, your wife is a smoker, but you're a non smoker again. The actions just treating your wife in the cigarette company that she purchased the cigarettes and now the action is that she's smoking. But you're not a smoker. You're 1/3 party in this. Ah, you. You could be not pleasant. And that's kind of tricky if you don't, you're a non smoker. But if you care about this moat, if you think this is something you don't like, then it is a negative externality. The name of externality would be zero if you just don't care if it doesn't affect you at all. But if it makes you less happy than it is a negative externality.

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