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
Answered by Fred E. Economics tutor

4258 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Why do higher interest rates cause the exchange rate of a currency to rise?


Outline and evaluate the economic effects of a fall in the value of the dollar?


Discuss the view that the measures taken to reduce the size of the budget deficit will inevitably result in a rise in unemployment in the UK.


Explain how The Monetary Policy Committee controls inflation within the UK economy.


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning