Those Opposed to Fracking, a Method of Extracting Natural Gas

question 211

Multiple Choice

Those opposed to fracking, a method of extracting natural gas through breaking up underground rocks with chemicals and water, warn that this method might pollute nearby sources of drinking water.
-Any such pollution is

• A) an external benefit.
• B) an external cost.
• C) a private cost.
• D) a private benefit.

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Definitions:

Liquidation

The process of winding up a company's affairs by selling off its assets to pay creditors and distribute any remaining assets to shareholders.

Pre-Tax Cost

Expenses or costs that are considered before taxes are applied.

Levered Value

The value of an investment, including the effects of borrowing; typically higher than the value without borrowing due to tax advantages and other factors.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often used to assess the cost of funding projects.