Question

a cost or benefit of a good imposed on people other than the consumers or producer of a good is called a(n):
a. private good.
b. externality.
c. public good.
d. merit good.

Explanation:

• A private good is excludable and rivalrous, with no spillover effects on third parties.
• An externality is defined as a cost or benefit from a good that affects people not involved in its consumption or production.
• A public good is non-excludable and non-rivalrous, available to all.
• A merit good is a good the government promotes as beneficial for society, not defined by third-party impacts.

The question's definition matches externality.

Answer:

b. externality.