The costs imposed on those who are not involved in the consumption and production activities are called

The costs imposed on those who are not involved in the consumption and production activities are called

• A. External Costs
• B. Private Costs
• C. Social Costs
• D. Public Costs

Answer: (A)

Negative externalities describe costs that spill over to people who are not involved in the production or consumption decision. For example, pollution from a factory imposes health or clean-up costs on nearby residents. These are costs borne by others, not by the producer or consumer, so they’re external costs. Private costs are the costs the decision-maker personally bears. Social costs include both private costs and external costs, giving the total cost to society. Public costs isn’t the standard term used for this idea.

Negative externalities describe costs that spill over to people who are not involved in the production or consumption decision. For example, pollution from a factory imposes health or clean-up costs on nearby residents. These are costs borne by others, not by the producer or consumer, so they’re external costs. Private costs are the costs the decision-maker personally bears. Social costs include both private costs and external costs, giving the total cost to society. Public costs isn’t the standard term used for this idea.