An Action Creates an Externality If It

Multiple Choice

An action creates an externality if it:

A) does not affect someone with whom the decision-maker has not engaged in a related market transaction.
B) affects someone with whom the decision-maker has not engaged in a related market transaction.
C) affects only those individuals engaged in the market transaction.
D) affects someone with whom the decision-maker has not engaged in a related market transaction and affects only those individuals engaged in the market transaction.