Question

Which of the following is an example of a negative externality?

	a.	Sara can’t afford a planned trip because airline fares spiked before she booked her flights
	b.	Analdi could not sleep because her neighbors were bursting firecrackers on the election day
	c.	Due to heavy rains, the coffee crop in Brazil was damaged
	d.	Zaida had to miss a movie with her friends because she had to study for

Answer 1

Option

b. Analdi could not sleep because her neighbors were bursting firecrackers on the election day

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A negative externality is a loss/cost to a third party which is not in the transaction or the event. In the same way, Analdi could not sleep because of the third party and it is an externality for her.

Sara and Zaida are part of the transaction and not make it so it is not a negative externality.

The rain is a natural climate and it does not have manual costs on others.