Externalities are costs to society, which have an impact on parties not directly involved into a particular economic transaction.

Question

Quizplus · Accepted Answer

Externalities are defined as costs or benefits that are not reflected in the prices of goods or services and are passed onto third parties. These costs can have an impact on society as a whole, not just on the individuals involved in the transaction. Therefore, the statement is true.

Externalities Are Costs to Society, Which Have an Impact on Parties