A market transaction causes an externality if someone
A) directly involved in the transaction receives uncompensated benefits or costs from it.
B) not directly involved in the transaction receives uncompensated benefits or costs from it.
C) directly involved in the transaction seeks legal assistance to ensure that the transaction is carried out.
D) not directly involved in the transaction interferes in it by imposing regulations or product standards.

Question

Quizplus · Accepted Answer

An externality occurs when a third party, not directly involved in the transaction, experiences uncompensated benefits or costs as a result of the transaction.

A Market Transaction Causes an Externality If Someone