A loud band plays a concert, late at night, in a neighbourhood park

Marketing Dec 25, 2020

A loud band plays a concert, late at night, in a neighbourhood park. The noise produced by the band that keeps the neighbours not attending the concert awake is what?

Expert Solution

The unwanted loud music is a negative externality of production, similar to pollution of the water or the air by manufacturing firms. Exernatlity means that there is a cost to someone that they did not ask for or pay for. Although this example is a negative externality, externalities can also be positive. Enjoyment of other people's gardens or holiday decorations would be an example. In those instances, someone gets a benefit that they did not ask for or pay for.

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