Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A person planting a tree that provides shade to others
B
A factory polluting a river
C
A driver causing traffic congestion
D
A homeowner increasing property taxes
Understanding the Answer
Let's break down why this is correct
Answer
A positive externality occurs when an action by one person or business has beneficial effects on others who are not directly involved. For example, if a homeowner decides to plant beautiful flowers and maintain a well-kept garden, it not only improves their property but also makes the neighborhood look nicer for everyone. As a result, property values may increase, and neighbors may feel happier walking in their area. This is a positive externality because the homeowner’s decision to beautify their yard positively impacts others without them having to pay for it. So, in this case, the benefits extend beyond the homeowner to the whole community.
Detailed Explanation
When someone plants a tree, it helps others by providing shade. Other options are incorrect because Pollution from a factory harms the environment; Traffic congestion makes it harder for everyone to get around.
Key Concepts
positive externalities
Topic
Externalities in Economics
Difficulty
easy level question
Cognitive Level
understand
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