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When a third party receives an unwarranted cost, it is called a...

O private cost
O negative externality
O market failure
O positive externality​

1 Answer

6 votes

Answer:

negative externality

Step-by-step explanation:

A product can be defined as any physical object or material that typically satisfy and meets the demands, needs or wants of customers. Some examples of a product are mobile phones, television, microphone, microwave oven, bread, pencil, freezer, beverages, soft drinks etc.

In Economics, a positive externality arises when the production or consumption of a finished product or service has a significant impact or benefits to a third party that isn't directly involved in the transaction.

On the other hand, a negative externality arises when the production or consumption of a finished product or service has a negative effect and/or impact (cost) on a third party.

This ultimately implies that, a negative externality is generated when a third party receives or bears an unwarranted cost. Some examples of a negative externality is John declining to buy his favorite candy due to an increase in its price, a manufacturing plant that causes noise and pollution to the people living around where it is situated, etc.

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