An "externality" occurs when
A) environmentalists protest.
B) pollution is controlled by bringing in outside people and technology.
C) a firm imposes unwanted costs on others.
D) the economy is weak.

Question

Quizplus · Accepted Answer

An externality refers to the cost or benefit that affects a third party who did not choose to incur the cost or benefit. In the context of business, this often refers to negative externalities, such as pollution and noise, which impose unwanted costs on individuals and society. This can lead to market failure if the true costs of production are not reflected in the market price of goods and services.

An "Externality" Occurs When