A cost or benefit that flows from an activity that has an impact on an individual's well-being, even though that individual was not directly involved in the activity, is known as A

Economics Dec 13, 2020

A cost or benefit that flows from an activity that has an impact on an individual's well-being, even though that individual was not directly involved in the activity, is known as

A. a capital loss.

B. a public good.

C. an externality.

D. a free-rider.

Expert Solution

The correct option is C. an externality.

Explanation:

When an individual is impacted positively or negative, such that gain benefit or incur a loss, by the activities of other people. This situation is known as the existence of externality. An externality is an external impact on an individual who is not directly engaged in the transaction. It affects the people and the environment and can be positive or negative.

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