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Chapter_10_Externalities_and_Public_Goods
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1. An externality is defined as:
a.
the effect of an activity undertaken outside a building rather than inside a building.
b.
an effect of market activity that impacts the opposite side of the market from the side whose decision caused the effect.
c.
a side-effect of an activity that affects bystanders whose interests are not taken into account.
d.
the impact of an activity on buyers and sellers in the market where the activity takes place.
ANSWER:
c
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