If the paint on your house was eaten away by the fumes from a factory nearby and you hired a lawyer to sue the polluting firm, your legal fees would be considered

Question

Quizplus · Accepted Answer

Legal fees in this scenario would be considered transactions costs, as they are expenses incurred in the process of conducting a legal transaction (suing the polluting firm). External costs refer to costs imposed on third parties who are not involved in the transaction (e.g. the health problems caused by pollution for individuals who are not part of the polluting firm or the suing party), while marginal benefits refer to the additional benefits gained from consuming one additional unit of a good or service. The social costs of pollution encompass all costs of pollution for society as a whole, including external costs.

If the Paint on Your House Was Eaten Away by the Fumes