Albert, Betty, Christine and David are all very good students. When they hold their study sessions, they often discuss very difficult concepts in great detail. Christine's roommate, Elizabeth, who takes completely different classes, still learns from the discussions of the others. This is the case of a(n) ____, which ____ a ____.

Question

Quizplus · Accepted Answer

Externalities occur when the actions of one party affect the well-being of another party without compensation. In this case, the discussions of Albert, Betty, Christine, and David benefit Elizabeth, who is not directly involved in their study sessions. This is an example of a positive externality, where the actions of one party benefit a third party.

Albert, Betty, Christine and David Are All Very Good Students