A cost or benefit of a good imposed on people other than the consumers or producer of a good is called a(n):
A) public good.
B) merit good.
C) private good.
D) externality.

Question

Quizplus · Accepted Answer

A cost or benefit imposed on people other than the consumers or producer of a good is called an externality. This can be positive, such as a neighbor planting a beautiful garden that improves the aesthetic of the entire street, or negative, such as a factory polluting a nearby river. This concept is not related to public goods, which are non-excludable and non-rivalrous, or merit goods, which are goods deemed to be necessary for an individual's personal or societal well-being regardless of whether they are aware of it or not. Private goods are goods that are both excludable and rivalrous, meaning that they are consumed privately and by one individual at a time.

A Cost or Benefit of a Good Imposed on People