Question

Which statement defines externality?

Answer 1

A.

It is a change in demand brought about by factors other than price.

B.

It is the external factors that cause a rise in the supply of goods or services.

C.

It is the external factors that cause a decrease in the supply of goods or services.

D.

It is the impact of production and consumption on unrelated third parties.

Answer 2

It refers to the cost or benefit of an activity by an economic agent for which it does not pay a price. Fr ex: factory produces goods , it releases harmful smokes n polluts our enviroment. In this case externality implies the negetive effect. Hope it helped u!!