An Externality Is

question 23

Multiple Choice

An externality is

• A) a cost or benefit resulting from some activity or transaction that is imposed or bestowed on parties outside the activity or transaction.
• B) the total cost to society of producing an additional unit of a good or service.
• C) the amount a consumer pays to consume an additional amount of a particular good.
• D) a problem intrinsic to public goods: The good or service is so costly that its provision generally does not depend on whether or not any single person pays.

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Definitions:

Semiannual

Occurring twice a year; a term often used in the context of payments, reporting periods, or interest calculations.

Par Value

A nominal value assigned to a share of stock in the charter of a corporation, unrelated to market value.

Effective Interest Amortization

A method of allocating loan interest payments over the life of the loan, taking into account the varying principal amounts.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, typically expressed as an annual rate.