An externality can be a cost or benefit arising from the production of a good that falls upon
A) consumers but not producers.
B) producers but not consumers.
C) both the consumer and the producer.
D) someone other than the consumer or producer.
E) no one, so it goes unpaid.

Question

Quizplus · Accepted Answer

An externality is a cost or benefit that affects someone other than the consumer or producer, thus option D is the correct answer.

An Externality Can Be a Cost or Benefit Arising from the Production