Externalities are defined as costs or benefits that affect parties who did not choose to incur those costs or benefits. They can be positive (benefits) or negative (costs) but are characterized by their impact on individuals or entities other than the immediate buyer or seller in a transaction.

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Externalities Are

Question 84

Multiple Choice

Externalities are

A) either costs or benefits imposed on those other than the seller or the buyer.
B) always benefits realized by the buyer.
C) always unpleasant.
D) always costs imposed on the seller.
E) either costs or benefits imposed on the seller or the buyer.

Correct Answer: