Externalities are defined as
A)any transaction external to the firm
B)costs or benefits that fall on third parties
C)policies that firms undertake to sell products outside the country
D)managers' dealings with stockholders outside the firm
E)costs of maintaining plant and equipment to avoid the scrutiny of external auditors

Question

Quizplus · Accepted Answer

Externalities refer to the costs or benefits that are not directly borne by the parties involved in a transaction but rather fall on third parties. These can be positive or negative and are often not reflected in market prices, resulting in market failures. Examples of externalities include pollution, noise, and traffic congestion.

Externalities Are Defined as