Question

which of the following statements about a well - maintained yard best conveys the general nature of the externality?
a well - maintained yard conveys a negative externality because it increases the property tax liability of the owner
a well - maintained yard cannot provide any type of externality
a well - maintained yard conveys a positive externality because it increases the home’s market value
a well - maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood

Explanation:

An externality is a cost or benefit that affects a third party not involved in the original activity. A well-maintained yard creates a positive spillover effect: it benefits neighbors by raising the value of their adjacent properties, which is a positive externality. The other options are incorrect: increased tax liability is a private cost for the owner, not an externality; the yard does create an externality; and increasing the home's own market value is a private benefit, not an externality.

Answer:

D. A well-maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood