What is a "negative externality"?

A A cost borne by third parties not involved in the transaction

B A benefit to society from production

C A decrease in product price

D A government regulation

✓ Correct Answer: Option A

A negative externality is a cost imposed on third parties who are not part of the economic transaction (e.g., pollution from a factory).

💡 Why is A) the correct answer?

The correct answer to the question "What is a "negative externality"?" is Option A: A cost borne by third parties not involved in the transaction.

The other options — B) A benefit to society from production, C) A decrease in product price, D) A government regulation — are incorrect for this General Knowledge question. As explained above: A negative externality is a cost imposed on third parties who are not part of the economic transaction (e.g., pollution from a factory).

📚 About This General Knowledge Practice Question

This 2-level General Knowledge question from the Capitals & Currencies topic is part of One Paper Preparation's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free General Knowledge practice test or use flashcards for spaced repetition review.

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What is a "negative externality"?

✓ Correct Answer: Option A

📚 About This General Knowledge Practice Question

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