Which of the following is the best definition of externality?

Question

Quizplus · Accepted Answer

Externality refers to a cost or benefit that affects a third party who did not choose to incur that cost or benefit. In this scenario, a private company imposes a cost on the public, i.e. the third party, which they did not choose to incur. Hence, option D is the correct definition of externality. Option A is too broad and does not specifically refer to third-party effects. Option B is incorrect because recycling is generally considered a positive activity that reduces waste and conserves natural resources. Option C is not related to the concept of externality.

Which of the Following Is the Best Definition of Externality