A cost or benefit that arises from production or consumption of a good or service that falls on someone other than the producer or consumer.

• A. Externality
• B. Public Goods
• C. Asset
• D. Debit Card

Answer: (A)

Externality is a spillover effect: a cost or benefit from producing or consuming a good that affects people who aren’t directly involved in the transaction. A negative externality, like pollution from a factory, imposes costs on nearby residents who aren’t part of the production decision. A positive externality, such as someone’s vaccination or a well-maintained neighborhood, provides benefits to others who don’t pay for them. This idea matches the description of a consequence that falls on someone other than the producer or consumer.

It’s different from public goods, which are things that are non-excludable and non-rivalrous and not primarily about spillover effects. It’s also not an asset or a debit card, which are financial concepts unrelated to spillover costs or benefits.