Classical economists, who support the profit-oriented school of social responsibility, recognize that there will be unintended effects of profit-seeking activities, called , that affect society and cannot be incorporated into or passed on in the price of an output.

Question

Quizplus · Accepted Answer

The term "externalities" refers to unintended effects (positive or negative) of economic activity on third parties who are not directly involved in the activity. Classical economists recognize that these externalities cannot be incorporated into the price of an output, and thus may need to be addressed through government intervention or other means. Choices A, B, and D do not accurately describe this concept.

Classical Economists, Who Support the Profit-Oriented School of Social Responsibility