A Situation in Which the Costs of Producing or the Benefits

question 78

Multiple Choice

A situation in which the costs of producing or the benefits of consuming a good spill over onto those who are neither producing nor consuming the good is called a(n)

• A)transaction cost.
• B)property right.
• C)free rider.
• D)externality.
• E)public good.

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Definitions:

Straight-Line Depreciation

A method of depreciation where an asset's cost is evenly spread across its estimated useful life.

Net Present Value

A financial metric that evaluates the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows over a period.

Capital Budgeting

The strategy of organizing and overseeing a firm's extended investments in significant projects or assets.

Cash Flow

The aggregate measure of capital movement into and from a business, significantly affecting its solvency.