In this case, _________imposes __________a externality on his neighbor in the form of noise pollution.

Why might a command-and-control policy that forbids music to be played above a certain decibel level lead to an inefficient outcome?

• An efficient outcome can be achieved only if everyone can do what they love.
• It is unfair because such policy would restrict Eric's activity but not Kenji's.
• Eric playing his music loudly does not does whatever they want.

True or False: According to the Coase theorem, Eric and Kenji might not be able to reach an agreement if the transaction costs are high.