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

The legal fees incurred in suing the polluting firm would be considered transaction costs, as they are expenses incurred in the process of making a transaction (in this case, pursuing legal action) to address the harm caused by the pollution. External costs refer to costs imposed on third parties who are not involved in the transaction, while marginal benefits refer to the additional benefits gained from a particular action. The social costs of pollution include both private costs (such as the cost of repainting a house) and external costs (such as the harm caused to the environment and public health).

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