When outcomes affect someone not involved in the initial choice, it is known as an externality.
Externality is when production or consumption activities have an effect on people who are not part of the consumption or production activity. Externality can be positive or negative.
Positive externality occurs when the benefits to third parties not involved in production is greater than the cost. An example of an activity that generates positive externality is research and development.
Negative externality occurs when the cost to third parties not involved in production is greater than the benefits. An example of an activity that generates negative externality is pollution.
To learn more about externalities, please check: https://brainly.com/question/26266710
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