A new public park is built in a neighborhood, leading to an increase in property values and local business revenues. How should this situation be classified in terms of market equilibrium and externalities?

The situation with the new public park can be classified as a positive externality in the market. A positive externality happens when an action benefits others who are not directly involved in the activity. In this case, the park enhances the neighborhood, making it more attractive to homebuyers and increasing property values, which benefits homeowners. Additionally, local businesses may see more customers who visit the park, leading to higher sales and revenues. This shows how the park creates benefits beyond just its users, affecting the entire community positively.