how can international travel create external costs?
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An external cost occurs when producing or consuming a good or service imposes a cost (negative effect) upon a third party.
◆If there are external costs in consuming a good (negative externalities), the social costs will be greater than the private cost.
◆The existence of external costs can lead to market failure. This is because the free market generally ignores the existence of external costs.
◆External marginal cost (XMC) the cost to a third party from the consumption/production of one extra unit.
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