Q. Which of the following correctly describes the economic term “Externalities”?

External factors that are responsible for the depreciation of the capital assets.

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Subsidies that are provided by the external actors such as the Government.

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Various taxes imposed on a product.

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Non accounted benefits or harms occured in an economic activity.

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Solution

The correct option is D
Non accounted benefits or harms occured in an economic activity.
Explanation:

In economics, the externalities refer to the benefits or harms a firm/an individual causes to another for which they are not paid/penalised. For example, pollution caused by industries. In general, these are difficult to get accounted for and not included in the calculation of a nation’s GDP.

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Similar questions

Externalities (or spillover effects) occur when firms or people impose costs or benefits on others outside the marketplace, as side effects.

Q25. Which of the following statements are correct?

1. A mixed economy refers to market economy with strong regulatory oversight and governmental provision of public goods.

2. A socialist economic system is characterized by social ownership and democratic control of the means of production.

3. Capitalism is an economic system in which capital goods are owned by private individuals.

4. Marxian economics provided a foundation for capitalism.

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