The extra external cost imposed on bystanders from one extra unit is _____ cost.

Question

Quizplus · Accepted Answer

The cost imposed on bystanders is an example of an external cost, which is not accounted for in the seller or buyer's decision-making. This cost is imposed on third-party individuals who are not involved in the transaction. Therefore, it is a marginal external cost. Options A and D are incorrect because the term 'public' refers to benefits and costs that accrue to society as a whole, rather than to bystanders specifically. Option B is incorrect because marginal private costs are the costs incurred by the seller or buyer in the transaction.

The Extra External Cost Imposed on Bystanders from One Extra