If an Individual Does Not Have to Pay to Use

question 103

Multiple Choice

If an individual does not have to pay to use a common resource,that individual will continue to use a common resource until his or her:

• A)marginal benefit is zero.
• B)marginal cost is zero.
• C)marginal benefit exceeds marginal cost.
• D)marginal benefit equals the marginal social cost.

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Definitions:

Interest Expense

The expenses an entity faces for borrowing money.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered and should not affect current and future business decisions.

Erosion Costs

Costs incurred when a new project or product negatively impacts the sales and profits of existing products or services.

Operating Cash Flow

The money a company makes from core business activities excluding costs associated with financing or investments.