In a situation where an externality occurs, the "third party" refers to those who:
A) Buy the product from others
B) Produce the product for others
C) Trade the product with others outside the nation or community
D) Are not directly involved in the transaction or activity

Question

Quizplus · Accepted Answer

The "third party" in the context of an externality refers to individuals or groups who are not directly involved in the transaction or activity but are affected by it. For example, pollution from a factory may affect the health and quality of life of people living nearby who are not employed by the factory or buying its products. These people are considered third parties to the transaction between the factory and its customers.

In a Situation Where an Externality Occurs, the "Third Party