If an activity generates external costs,the decision makers generating the activity will:
A)be faced with its full costs.
B)be faced with no costs.
C)not be faced with its full costs.
D)be faced with excessive costs.

Question

Quizplus · Accepted Answer

When an activity generates external costs, the decision makers do not bear the full costs of their actions. As a result, they do not have an incentive to reduce these costs or internalize them. The external costs are borne by third parties, such as society or the environment. Therefore, the decision makers are not faced with the full costs of their actions.

If an Activity Generates External Costs,the Decision Makers Generating the Activity