A cost that arises from the production of a good that is paid by someone who did not participate in the production is called
A) a free rider.
B) a public failure.
C) an externality.
D) rent seeking.

Question

Quizplus · Accepted Answer

An externality is a cost (or benefit) that affects a party who did not choose to incur that cost or benefit. It arises when the production or consumption of a good or service has an impact on third parties not directly involved in the transaction.

A Cost That Arises from the Production of a Good