Externalities are:
A)external forces that help establish equilibrium price
B)external forces that cause the price of a good to be higher than it otherwise would be
C)side effects of government intervention in markets
D)side effects passed on to a party other than the buyers and sellers in the market

Question

Quizplus · Accepted Answer

Externalities are side effects of economic activities that are not reflected in the market price, but are borne by parties other than the buyers and sellers involved in the transaction. These external effects can be positive or negative and can affect individuals or society as a whole.

Externalities Are