External effects from a transaction indicate that there is a misalignment between private and social benefits or costs.

Name: External effects from a transaction indicate that there is a misalignment between private and social benefits or costs.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

External effects occur when the private costs or benefits of a transaction are not equal to the social costs or benefits. This results in a misalignment between individual incentives and societal welfare.

External Effects from a Transaction Indicate That There Is a Misalignment