Economists generally call the effect of an agreement on others that is not taken into account by the parties making the agreement:
A) excess burden.
B) welfare loss.
C) Pareto optimality.
D) an externality.

Question

Quizplus · Accepted Answer

An externality is an effect of a transaction that impacts third parties who are not involved in the agreement, and it is not accounted for by the parties involved.

Economists Generally Call the Effect of an Agreement on Others