🎴 Flashcard Mode
Externalities and Market Failures
Card1 / 14
Mastered0
Review0
QuestionClick to flip
What is an externality?
AnswerClick to flip back
A
A cost or benefit that arises from the production or consumption of a good or service that is not reflected in the market price.
💡 Explanation:
Externalities are costs or benefits that arise from the production or consumption of a good or service that are not reflected in the market price. This means that the producer or consumer of the good or service does not bear the full cost or reap the full benefit of their actions.