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Marucs Zhang
on Dec 17, 2024

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The concept of external cost is associated with a negative externality, but not with a positive externality.

External Cost

A cost that a transaction or activity imposes on a party who is not involved in the transaction, often not reflected in market prices.

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with environmental, health, and safety concerns of public and private actions.

Positive Externality

A benefit that is enjoyed by a third-party as a result of an economic transaction.

  • Differentiate between beneficial and detrimental externalities and their impact on societal well-being.
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Nikki TuasonDec 22, 2024
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