When an action by one agent harms another outside of any market exchange, there is a(n):
A) public choice.
B) tax incidence.
C) transfer payment.
D) external cost.

Question

Quizplus · Accepted Answer

External cost refers to the cost or harm imposed on individuals or society as a whole by a person, organization, or government in the course of their economic activities or other actions. External cost is also known as a negative externality, which is a cost incurred by a third party who has no control over it. It is therefore the best choice for the given scenario.

When an Action by One Agent Harms Another Outside of Any