Costs that arise from a market transaction but that are borne by people not involved in the transaction are called _____ costs.

Question

Quizplus · Accepted Answer

External costs, also known as negative externalities, are costs that are imposed on third parties who are not involved in the market transaction. These costs can include things like pollution or noise that affect people or the environment outside of the transaction itself. Public costs (B) are those that are borne by society as a whole, while reversal costs (C) are not a commonly used term in economics. Outside costs (A) is not a commonly used term to describe externalities.

Costs That Arise from a Market Transaction but That Are