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Which of the Following Is True of Externality

Question 4

Multiple Choice

Which of the following is true of externality?


A) An externality enhances the efficiency of the market system.
B) An externality is not an economic problem because it is external to the market.
C) An externality is a cost borne by the people who are directly or indirectly involved in the production of a good or service.
D) An externality accrues to someone who had nothing to do with the production or consumption of a good or service.
E) An externality refers to some unexpected change in the equilibrium price or quantity of a product.

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