Vocabulary Builder — Essay & Answer Writing
Externality
noun
/ ek-ster-NAL-ih-tee /
Hard
Meaning
A cost or benefit of an economic activity that affects parties who are not directly involved in the transaction and is not reflected in market prices
Origin / Etymology
Latin externus — outward, external
Synonyms
Spillover effect
Side effect
Third-party impact
Antonyms
Internalised cost
Market price
Example Sentence
"Jobless growth creates negative externalities — rising GDP alongside stagnant employment generates social instability that economic indicators fail to capture."
🎯 UPSC Usage
Core economics concept for GS3. Use in answers on pollution (negative externality), education/healthcare (positive externality), Pigouvian tax, carbon pricing, and market failure.
Relevant Subjects