Question

Explain 3 specific situations with details of how you imposed a negative externality on someone else. Describe:

1) exactly what you did that imposed a cost on someone else;

2) how your actions negatively affected the other person;

3) how you should have acted differently to eliminate or reduce the negative externality.

Be specific and explain thoroughly.

Answer 1

Situation 1
1. When I watch a movie with audio on full volume while my neighbor sleeps at night.
2. My neighbor pays the cost of not being able to sleep, since social cost incurred is more than my private cost.
3. I could have lowered the volume down to reduce the social cost, hence, reduce the negative externality

Situation 2
1. Me not getting my car checked for an efficient pollution certificate.
2. The cost of air pollution to the society, when I drive my car is way more than my private cost.
3. I could have gotten my car a pollution free certificate or better quality fuel to reduce the social cost.

Situation 3
1. If I smoke a ciggarete with other people around.
2. For others the cost of passive smoking is unwanted and more than my own private cost, hence it is also harming their health.
3. I could have gone to a smoking zone or somewhere where people don't frequent regularly.