Question

question 34
which of the following statements about a well - maintained yard best conveys the general nature of the externality?
a well - maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood
a well - maintained yard conveys a positive externality because it increases the homes market value
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

Explanation:

To determine the correct answer, we analyze the concept of externalities. An externality is a cost or benefit to a third - party not involved in the transaction.

• Option 1: A well - maintained yard increasing the value of adjacent properties means it provides a benefit to neighbors (third - parties), so this is a positive externality.
• Option 2: Increasing the home's own market value is a benefit to the owner, not a third - party, so it's not an externality.
• Option 3: Increasing the owner's property tax liability is a cost to the owner, not a third - party, and it's not a negative externality in the sense of affecting others.
• Option 4: A well - maintained yard can provide a positive externality (as seen in Option 1), so this is incorrect.

Answer:

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