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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
Economy Environment
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