Question

What is externality? A. a side effect of a good service generating benefits or costs to someone who doesn't decide how much to produce or consume B. someone who would choose to pay for a certain good or service but does not get the benefits of it if provided as a public good C. someone who wouldn't choose to pay for a certain good or service but who'd get the benefits of it anyway if provided as a public good D. a shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers

Answer 1

A. a side effect of a good/service generating benefits or costs to someone who doesn't decide.

ex. A factory that generates pollution is a negative externality. Maintaining the appearance(value) of your house, is a positive externality for your neighbors.

Answer 2

A a side effect of a good service generating benefits or costs to someone who doesn't decide how much to produce or consume