Asked by Jonnel Young on May 02, 2024
Verified
Externalities occur when the welfare of others not involved in the production or consumption of a good or service are affected in ways that markets don't take into account on their own.
Externalities
Costs or benefits that affect a party who did not choose to incur that cost or benefit.
- Comprehend the idea of market malfunction and externality impacts.
Verified Answer
ZK
Zybrea KnightMay 08, 2024
Final Answer :
True
Explanation :
This is the definition of externalities, which are a well-known market failure. Markets can only account for private costs and benefits, not external costs or benefits imposed on third parties.
Learning Objectives
- Comprehend the idea of market malfunction and externality impacts.