How to define the term "external costs"

There are many acceptable definitions of "external costs" but if you have the basic understanding of what it is then you should be fine. Firstly you know that it is a negative effect/impact by "costs" and from "external" you know that it is put onto a third party and can arise from high social costs. Therefore a suitable definition would be something along the lines of; External costs are the negative effects put onto a third party as a consequence of an economic activity.

FE

Related Economics A Level answers

All answers ▸

Can the creation of a labour union actually cause a loss of employment?


What are public goods and how do they lead to the 'free-rider' problem?


explain the effect of a rise in government expenditure in the AD-AS framework


Evaluate measures that could be pursued by individual firms and by the government to reduce a current account deficit (30)