Whether an externality is positive or negative, it is always
A) evaluated by the Supreme Court of the United States.
B) evaluated by the government.
C) evaluated by the impact on the third party.
D) judged by the profitability of the firm producing the product.

Question

Quizplus · Accepted Answer

An externality is evaluated by the impact it has on the third party affected by the production or consumption of a good or service. It is not necessarily evaluated by the government or the Supreme Court, and it is not judged solely based on the profitability of the firm. Therefore, choice C is the correct answer.

Whether an Externality Is Positive or Negative, It Is Always