Final answer:
The cost described is known as an 'external cost' or 'externality,' which isn't precisely represented by the provided options but is closest to the concept of an 'indirect cost.' Fixed costs and variable costs are business expenses that vary with production levels and do not describe costs impacting third parties who are not part of the economic activity.
Step-by-step explanation:
The cost of an activity that impacts people not engaged in that activity is known as an external cost or externalities. This does not align with the options provided, which pertain to the costs borne by a business.
However, the closest term that represents an external cost is an indirect cost, although this term doesn't precisely capture the essence of costs imposed on third parties.
Indirect costs in business contexts usually refer to overheads or general operational expenses that are not directly linked to the production of a specific product or service but are necessary for the general functioning of the company.
Conversely, fixed costs are expenses that do not change regardless of production levels. Examples include rent, salaries, and insurance, where outlays remain constant despite the quantity of output a firm produces.
Variable costs, on the other hand, fluctuate in direct proportion to the level of production, such as the cost of raw materials and labor used in the production process.
In summary, the term that best describes a cost that falls on those not engaged in the activity is an external cost, which is not listed among the provided options.