What are externalities?
A)The extra cost involved in the packaging and marketing of a product.
B)The additional costs of a product which cannot be recouped from the government.
C)The extra cost to the consumers of a product in terms of maintenance and insurance.
D)The benefits or costs of a product experienced by people who neither consume nor produce that product.

Question

Quizplus · Accepted Answer

Externalities refer to the positive or negative impacts or effects of a product, service or activity on third parties who are not directly involved in its production or consumption. These impacts are not reflected in the market price of the product and can either be positive (benefits) or negative (costs). For example, the pollution caused by a factory is a negative externality that affects the health of people living nearby or the environment, and the benefits of public infrastructure like roads or parks are positive externalities.

What Are Externalities