A local brewery produces craft beer, which not only satisfies customers but also generates increased tourism in the area. How should this scenario be classified in terms of externalities?

In this scenario, the local brewery creates a positive externality because its production of craft beer benefits more than just the brewery itself. When the brewery produces beer that customers enjoy, it attracts more visitors to the area, which helps local businesses like restaurants and hotels. This means that the brewery's success leads to increased tourism, providing economic benefits to the community as a whole. For example, when a group of tourists visits the brewery, they might also spend money at nearby shops and attractions, boosting the local economy. Therefore, the brewery's activities produce positive effects beyond its immediate profits, highlighting the concept of positive externalities in production.