An external cost is the cost experienced by people who
A) do not decide how much of a good to produce or consume.
B) did not know why they are experiencing the cost.
C) decide how much of a good to produce or consume.
D) consume a good.

Question

Quizplus · Accepted Answer

External costs are costs that are experienced by people who do not decide how much of a good to produce or consume. These costs are imposed on individuals or society as a whole by the actions of others, such as pollution or noise pollution caused by a factory. The decision makers do not take these external costs into account when making their decision, resulting in an inefficient allocation of resources.

An External Cost Is the Cost Experienced by People Who