WEEK 4, DISCUSSION QUESTION 2 Class, 1. Explain the concept of negative externalities. 2. Give an example of negative externalities from your work or personal life. 3. Explain the concept of positive externalities. 4. Give an example of positive externalities from your work or personal life.
Answer: 1. A negative externality is when an economic transaction between 1 party (the seller) and another party (the buyer) causes harm to a third party that had NOTHING TO DO WITH THE TRANSACTION.