alleryStart learning →Loud music you hate wafting into your house every night is given as an example of a:
ANegative externality
BPositive externality
CMarketable permit
DPollution charge
Answer & Solution
Correct answer: A. Negative externality
1. The same spillover can be good or bad depending on who receives it.
2. A neighbour's music reaches a third party outside the exchange.
3. If you hate country music, having it waft into your house would be a negative externality.
4. Whether it is negative depends on the effect on that third party.
_Source: OpenStax Principles of Microeconomics for AP Courses 2e (CC BY 4.0), Ch 12 'Environmental Protection and Negative Externalities'_
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