An externality arises when a firm or person engages in an activity that affects the well-being of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is beneficial, it is called a positive externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good. With this type of externality, in the absence of government intervention, the market equilibrium quantity produced will be greater than the socially optimal quantity. Which of the following generate the type of externality previously described? Check all that apply. Susan has planted hundreds of flowers in her front yard, beautifying the neighborhood both for herself and for her neighbors. The city where you live has turned the publicly owned land next to your house into a park, causing trash dropped by park visitors to pile up in your backyard. A leading software company has decided to increase its research budget for inventing new open-source technologies. Your roommate, Eileen, has bought a cat to which you are allergic