A negative externality
A)is a cost to a bystander.
B)is a cost to the buyer.
C)is a cost to the seller.
D)exists with all market transactions.

Question

Quizplus · Accepted Answer

A negative externality is a cost imposed on a third party who is not involved in the transaction. For example, pollution from a factory imposes costs on nearby residents who did not purchase the goods produced by the factory. Therefore, it is a cost to the bystander, not to the buyer or seller necessarily. While negative externalities are common, they do not exist in all market transactions.

A Negative Externality