It is true of externalities that they

Question

Quizplus · Accepted Answer

Externalities can either be positive or negative, meaning they can be beneficial or detrimental. They arise when some of the costs or benefits of a transaction are not reflected in the market price. When this happens, the market fails to allocate resources efficiently, leading to a deadweight loss. Including social costs in production cost would help reduce externalities, but it is not always the case that all costs, social and private, are included.

It Is True of Externalities That They