Which of the following would be classified as a positive externality?

• A. A person smokes in a public park, affecting others' health.
• B. A company dumps waste into a river, harming aquatic life.
• C. A homeowner plants a garden that beautifies the neighborhood.
• D. A factory emits pollution that affects nearby residents.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of externalities. Externalities are costs or benefits that affect third parties who are not directly involved in an economic transaction.
2. Step 2: Differentiate between positive and negative externalities. A positive externality provides benefits to others, while a negative externality imposes costs on others.
3. Step 3: Analyze each option to determine if it creates a benefit or a cost for third parties:
4. - Smoking in a public park harms others' health, which is a negative externality.
5. - Dumping waste into a river harms aquatic life, which is a negative externality.
6. - Planting a garden that beautifies the neighborhood provides a benefit to others, which is a positive externality.
7. - Factory pollution affecting residents imposes costs on others, which is a negative externality.