Externalities occur because:
A)there is idle capital.
B)there are chronic shortages.
C)people are greedy.
D)there are no property rights.

Question

Quizplus · Accepted Answer

Externalities occur because there are no property rights. When individuals or businesses engage in activities that affect others, the costs or benefits may be incurred by parties who are not part of the transaction. In the absence of property rights or regulations, the costs or benefits of these activities are not factored into the decision-making process and may result in inefficient outcomes.

Externalities Occur Because