Which of the following best describes an externality?
A) something that is external to the economy
B) a sales tax on a good in addition to the market price
C) an effect of a transaction felt by someone other than the buyer or seller
D) anything produced in other countries
E) a change from what is normal

Question

Quizplus · Accepted Answer

An externality is a cost or benefit of a transaction that is not reflected in the price, and is felt by someone other than the buyer or seller.

Which of the Following Best Describes an Externality