An external cost is a cost paid by:
A) the consumers trading in the market.
B) the producers trading in the market.
C) the government regulating the market.
D) people other than the consumer and the producer trading in the market.

Question

Quizplus · Accepted Answer

An external cost, also known as a negative externality, is a cost that is imposed on people or parties outside of a transaction between a buyer and seller. Therefore, people other than the consumer and the producer trading in the market, such as third parties or society as a whole, are the ones who pay the cost of an external cost.

An External Cost Is a Cost Paid By