Question

A negative externality:

A) is a cost to a bystander.
B) is a cost to the buyer.
C) is a cost to the seller.
D) exists with all market transactions.

Answer 1

A) is a cost to a bystander.

Step-by-step explanation:

A negative externality is defined as the difference between the social cost and an economic agent from the private cost of an action.

A negative externality is a cost to a bystander as negative externality occurs when a transaction between a buyer and seller affects third party with a loss, which has no involvement in the transaction.

Hence, the correct option is A.