A cost or benefit of the production or consumption of a good or service that falls on parties that are not directly involved in the transaction is called
|a non-excludable good.|
|a non-rival good.|
|a public good.|
|a private good.|
Marginal external cost is
|the extra cost that a consumer pays in order to purchase one more unit of a product.|
|paid entirely by parties paying for a transaction and not by non-paying bystanders.|
|the extra cost that a firm pays in order to produce a product.|
|all the costs incurred by people affected by a transaction, both the direct paying parties and the bystanders.|
|the marginal cost of production that accrues to individuals and firms not directly involved in the transaction.|
1. Such costs of benifits are known as externalities. Externality can be positive or negative. A positive externality is one in which the third party not involved in the transaction is benifitted and negative externality is one in which the third party has to bear a cost.
2. It is the marginal cost of production that accrues to individuals and firms not directly involved in the transaction. It is not borne by the people directly involved in a transaction , rather it is borne by people and firms not involved in the transaction.
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