What is an externality
A)the impact of society's decisions on the well-being of society
B)the impact of a person's actions on that person's well-being
C)the impact of a person's actions on the well-being of a bystander
D)the impact of society's decisions on the well-being of an individual in that society

Question

Quizplus · Accepted Answer

An externality is the impact of a person's actions on the well-being of a bystander, meaning someone who is not directly involved or benefiting from the action. For example, pollution from a factory can affect the health and well-being of people living nearby who are not employed by the factory. This is a negative externality. Positive externalities, where the actions of one person benefit others without compensation, also exist, such as when a person vaccinates themselves, it benefits the community as a whole through herd immunity.

What Is an Externality