48. Oliver is obsessed with keeping his yard nice and clean. Which statement best illustrates the nature of the externality created by a well-maintained yard?
Answer: B
A well-maintained yard creates a positive externality by increasing the value of adjacent properties in the neighborhood.
The nature of the externality created by a well-maintained yard is illustrated by its impact on the value of neighboring properties. This indicates that Oliver's actions not only benefit himself but also enhance the overall appeal and value of the surrounding area.
A) A well-maintained yard creates a positive externality by increasing the market value of Oliver's house
While it is true that a well-maintained yard can increase the market value of Oliver's house, this statement focuses solely on his property. The question seeks to highlight how Oliver's yard affects others, making this option less relevant in illustrating the broader externality at play.
B) A well-maintained yard creates a positive externality by increasing the value of adjacent properties in the neighborhood
This option accurately describes the positive externality created by Oliver's well-maintained yard. It reflects how his efforts not only enhance his property but also benefit his neighbors by potentially raising their property values, which is the essence of a positive externality.
C) A well-maintained yard cannot provide any type of externality
This statement is incorrect as it dismisses the concept of externalities entirely. A well-maintained yard can indeed create positive externalities, particularly in terms of aesthetics and property values, contradicting the assertion that no externality exists.
D) A well-maintained yard creates a negative externality by increasing property taxes for Oliver
This option misunderstands the concept of externalities. While it is possible for a well-maintained yard to lead to higher property taxes due to increased property value, this aspect pertains to Oliver alone and does not represent an externality affecting others in the neighborhood.
Conclusion
Option B is the definitive correct answer as it highlights the positive externality created by Oliver's well-maintained yard, which positively impacts the value of adjacent properties. The other options fail to capture this broader effect or misinterpret the nature of externalities, emphasizing the importance of community benefits in understanding property maintenance.