A large farm uses fertilizer that nearby landowners complain may contaminate their water. Tests are conducted and contaminants are found. The costs resulting from this decision are referred to as

Question

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The costs resulting from the fertilizer use that affects nearby landowners' water are external costs. These are costs that are not borne by the firm but rather by a third party or society as a whole. In this case, the nearby landowners are facing the negative consequences of the farm's fertilizer use, and they are not being compensated for it.

A Large Farm Uses Fertilizer That Nearby Landowners Complain May