Negative externalities occur when one person's actions
A)cause another person to lose money in a stock market transaction.
B)cause his or her employer to lose business.
C)reveal his or her preference for foreign-produced goods.
D)adversely affect the well-being of a bystander who is not a party to the action.

Question

Quizplus · Accepted Answer

Negative externalities occur when a person's actions have a negative impact on the well-being of a third-party bystander who is not involved in the original action. Examples of negative externalities include pollution from a factory affecting the health of nearby residents or second-hand smoke harming non-smokers in the vicinity. Options A, B, and C all involve actions affecting specific parties involved in a transaction or relationship, whereas externalities impact individuals who are not directly involved.

Negative Externalities Occur When One Person's Actions