An externality is
A)a benefit realized by the purchaser of a good or service.
B)a cost paid for by the producer of a good or service.
C)a benefit or cost experienced by someone who is not a producer or consumer of a good or service.
D)anything that is external or not relevant to the production of a good or service.

Question

Quizplus · Accepted Answer

An externality can be defined as a benefit or cost experienced by someone who is not a producer or consumer of a good or service. It arises when the actions of one economic agent affect the welfare or utility of another economic agent, and this effect is not reflected in market prices. For example, pollution from a factory may impose costs on local residents who are not directly involved in the production or consumption of the goods produced by that factory.

An Externality Is