What are external costs?
A) costs borne by the government
B) costs borne by free riders
C) costs borne by exporting firms
D) costs borne by parties not directly involved in a transaction

Question

Quizplus · Accepted Answer

External costs are costs that are not directly borne by the parties involved in a transaction, but instead are borne by third parties. Examples of external costs include pollution, traffic congestion, and noise pollution. These costs are often referred to as negative externalities, which means they have a harmful impact on society as a whole. Governments may intervene to address external costs through regulations or taxes, but in many cases, the costs are not fully accounted for in economic transactions.

What Are External Costs