Question

Which of the following could be a synonym for the world 'externality'?

A. cause
B. example
C. side-effect
D. public good

Answer 1

Answer: option C. side-effect

Externality is an economic term, used to refer the damage or benefit that an individual or community experience, due to the activity of other agents who are pursuing other objective.

For example, when a enterprise burns fuel to produce energy, the increase of CO2 is an externality.