An externality is
A)an additional cost imposed by the government on producers.
B)an additional gain received by consumers from decisions made by the government.
C)a cost or a benefit from an action that falls on someone other than the person or firm choosing the action.
D)a marginal social cost.
E)the additional amount consumers have to pay to consume an additional amount of a good or service.

Question

Quizplus · Accepted Answer

An externality is a cost or a benefit from an action that falls on someone other than the person or firm choosing the action. It is a consequence of an economic activity that is experienced by unrelated third parties. Examples of externalities include pollution from production, noise from transportation, and education or vaccination leading to external benefits.

An Externality Is