15. ________________ are a consequence of an economic activity that spills over

Question

15. ________________ are a consequence of an economic activity that spills over to affect third parties,
i.e., parties who are not directly involved in a given activity or transaction. This is also created by a lack of clearly assigned property rights—that is, rights of an owner to use and exchange property—prevents market prices from reflecting all costs that spill over on third parties. This is a description of (select best answer): (Multiple Choice)

a. Exceptionalism

b. Internalities

c. Price Floors and Price Ceilings

d. Externalities

Explanation / Answer

D.Externalities.

Externalities are spillover effects that results from a transaction of 2 parties which affects the third party not involved in the transaction.It is also called external effects.

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