Question

Indicate whether each of the following activities is associated with a positive externality, a negative externality, or neither.

a. Someone at your table is chewing with his or her mouth open.

b. Going to graduate school in economics.

c. Someone asks a really good question in class.

d. Driving your car.

e. A professor writes an excessively long problem set.

f. Someone is scalping tickets to the Super Bowl at a ridiculously high price.

Answer 1

a) Neither. Unless the chewing gum falls on the table (in that case a negative externality)

b) Positive externality. Achieving education is good for the society as a spillover effect in improving thr overall literacy rate, framing good policies, earning income, etc.

c) Positive externality. A good question can lead to a great conclusion which can benefit the masses.

d) Negative externality. Driving a car leads to pollution which deteriorates air quality.

e) Neither. No good or bad can happen to anyone/anything which would be classified as externality.

f) Negative Externality. Scalping is kind of black marketing which creates distortion and might as well be counted in a moral hazard problem.