An externality exists when

Name: An externality exists when
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Question

Quizplus · Accepted Answer

An externality exists when there are external costs, which are costs that affect a party who did not choose to incur that cost. These costs are not reflected in the market price and therefore not taken into account by buyers and sellers, leading to market inefficiencies. Private and internal costs are not necessarily externality-related, and opportunity costs are not related to any particular cost category.

An Externality Exists When