Which of the following best describes external costs?

External costs refer to costs that are not borne by the individuals or businesses directly involved in an economic transaction but rather are imposed on society at large. These costs often arise from activities such as pollution or resource depletion, which can have harmful effects on public health, environmental sustainability, and overall quality of life. Because these external costs are not accounted for in the market prices of goods and services, they are often overlooked in the decision-making processes of producers and consumers. This discrepancy can lead to market failures, where the true social costs of production and consumption are not reflected, resulting in overproduction or overconsumption of goods that have detrimental effects on society.

While the other options touch on aspects of costs, they do not capture the essence of external costs as well as the correct choice. For example, costs borne exclusively by producers focus solely on the producers' expenses without considering the broader societal impact. Similarly, costs that do not affect third parties contradict the concept of external costs, which specifically arise from effects on third parties. Lastly, costs that promote economic growth suggest a positive impact rather than the negative implications usually associated with external costs.