An external benefit of an activity is one that is
A) not included in the social marginal cost.
B) received by those directly involved in the activity.
C) included in the private marginal benefit.
D) never present in the real world.
E) received by those not directly involved.

Question

Quizplus · Accepted Answer

An external benefit is a benefit that is received by those who are not directly involved in the activity. It is not included in the private marginal benefit because it is not directly received by the individual participating in the activity. It is also not included in the social marginal cost because it is not a cost incurred by society as a whole. Therefore, the correct answer is E.

An External Benefit of an Activity Is One That Is