Question

Describe some examples of positive externality and negative externality when living in a neighborhood of your country’s biggest gangster mob boss.

Answer 1

An externality is a consequence of an action on a third party. This could be a positive externality which is a benefit on the third party whereas a negative externality is the cost that a third party bears. When living in the locality of country's biggest gangster, the negative externality could be the fear that we have to live in. This could be because of the constant fear of some criminal entering the house or being a victim of gang wars.

Whereas the positive externality would be that because police knows that the gangster lives there, they would patrol the area regularly to ensure crime is less. This reduces crime in the area and the possibility of a thief breaking into the house reduces which is a positive externality.