Externalities are effects of a transaction that __________ people who are not part of that transaction.

Question

Quizplus · Accepted Answer

Externalities can either help or hurt people who are not directly involved in the transaction. For example, a factory that produces pollution help the factory owner by reducing the cost of production, but hurt the people living nearby by posing health risks. On the other hand, a homeowner who plants a beautiful garden can help the neighborhood by improving the aesthetic, but hurt the bees that rely on the flowers for food by removing their source of nectar.

Externalities Are Effects of a Transaction That __________ People Who