Imagine a five-star hotel opens in toronto which of the following could not be considered an externality? a. the bright lights of the hotel make it difficult to see the beautiful aurora borealis (“northern lights”) b. the hotel provides employment for many of the native residents c. the hotel generates traffic to the area causing other businesses to spring up around the area d. the surrounding neighborhood smells like freshly baked waffles eggs and bacon in the morning

D. The surrounding neighborhood smells like freshly baked waffle eggs and bacon in the morning. 

Externality is the outcome of an economic activity that affects the unrelated third parties positively or negatively. The smell of freshly baked waffles eggs and bacon experience is not applicable for this five-star hotel. This is only applicable to restaurants and other food stalls nearby. Though restaurants could be present in a hotel, however, it's too big and too confined to let the surrounding neighborhood smells the food. 

Letter A is a negative externality. We can only see the Northern Lights when the skies are dark. For sure, those bright lights could ruin our night for they might cover the whole skies of the city. 

Letter B is a positive externality. Obviously, employment is one of the country's problems. Now, it is solved.  Thanks to Toronto Hotel. 

Letter C is both positive and negative. Traffic is not good for those regular employees who work early in the morning just to be stuck in a heavy traffic. However, it's good for other businesses. Well, necessity is the mother of invention. Businessmen are smart enough to meet people's needs but of course with a price and added profit. Good for them.