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 ▸

Should the fizzy drinks market be regulated or left to the free workings of the market?


Explain the factors influencing short run and long run aggregate supply


Why does the Price Mechanism exist and what are the functions of it?


Why can customs unions lead to higher prices for consumers?