Question

which statement defines externality? a. it is a change in demand brought about by factors other than price. b. it is the external factors that cause a rise in the supply of goods or services. c. it is the external factors that cause a decrease in the supply of goods or services. d. it is the impact of production and consumption on unrelated third parties.

Explanation:

Externality refers to the spill - over effects of production and consumption activities on third parties who are not directly involved in those activities. These effects can be positive (beneficial) or negative (harmful).

Answer:

D. It is the impact of production and consumption on unrelated third parties.