A positive externality is created if
A) An action harms someone not involved in the market transaction
B) An action benefits someone not involved in the market transaction
C) Neither helps nor hurts someone not involved in the market transaction
D) An action harms someone involved in the market transaction

Question

Quizplus · Accepted Answer

A positive externality occurs when an action or transaction benefits a third party who is not directly involved in the market transaction. This creates a positive spillover effect that is not reflected in the market price.

A Positive Externality Is Created If