When the costs of an action are not fully borne by the two parties engaged in a transaction, this is called a(n)

Question

Quizplus · Accepted Answer

When the costs of an action are not fully borne by the two parties engaged in a transaction, it results in externalities. Externalities are costs or benefits that are not reflected in the market price of goods or services and are instead imposed on individuals who are not involved in the transaction, leading to inefficiencies in the market.

When the Costs of an Action Are Not Fully Borne