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 ▸

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


Explain how monetary policy can be used to prevent business cycles


What is meant by absolute poverty and analyse how access to clean water, or another essential item, is closely linked to production, income and wealth, within countries and between countries.


Explain the main reasons for government spending