00:01
First of all, a negative externality is basically a cost to a third party due to the action of two other parties.
00:15
The negative externalities lead to larger output levels by the party which engage in activities that lead to negative externalities because the cost are comparatively lower and profits are higher so a negative externality exists when the production and consumption of a product results in cost to the third party now talking about examples.
01:57
Examples are negative air pollution, noise pollution, when one neighbor plays very loud music at night when it is time for everyone to be loud music at night when it is time for everyone to.
03:23
Water pollution by firm upstream that farmers downstream are affected because they cannot use that water means the polluted water now how do these negative externalities lead to market failure.
04:52
So negative externalities lead to market failure because encourages increased production at lower.
05:56
So after a point the costs are not adequate.
06:16
To the production and as a result leads to market failure.
07:00
The equilibrium that is achieved in a market externality fails to accurately greatly determine the real cost of production.
08:23
Now to avoid these negative externalities, involvement of government is really must.
08:32
So government involvement leads to better cop -up for the negative externalities...