Externalities are the unintended side effects of an economic activity that affect other parties who did not choose to be involved. These effects can be positive or negative. For example, a factory that pollutes the air creates a negative externality, impacting the health of nearby residents. Conversely, a well-maintained garden can provide a positive externality by enhancing the neighborhood's beauty and increasing property values. Governments often intervene to address externalities through regulations or taxes. For instance, they may impose a tax on pollution to encourage companies to reduce harmful emissions. This helps align private costs with social costs, promoting a healthier environment for everyone.