The city council allocates funds for road repair. Which circumstances would be a positive externality?

Answer: Citizens spend less money repairing punctured and torn tires.

Explanation:

A positive externality is the economic benefit that is enjoyed by the third party that may or may not had contributed for the resource. The individuals who obtain benefits without paying are considered as free-riders.

According to the given situation, the citizens will get benefit from road repair. As the road will become smooth for riding thus the citizens will spend less money for repairing the torn tires and puncture. This is an example of positive externality. The citizens are the third party obtaining benefit from road repair.