Which of the Following Would Be Classified as an External

question 190

Multiple Choice

Which of the following would be classified as an external cost?

• A) As more firms began hiring computer programmers, the salaries of computer programmers increased, and therefore the firm's cost of production increased.
• B) A private firm will not provide national defense, as it is impossible to confine the benefits to only those individuals who have paid for it.
• C) You are not able to study at night because there is so much noise coming from the dorm room next to yours.
• D) When you purchase a prescription drug, you are not made fully aware of all the possible side effects that may result from taking the drug.

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period of time, typically measured as a percentage increase in real gross domestic product (GDP).

Materials Efficiency

Refers to the measure of how effectively resources and materials are used in the production process to minimize waste and reduce environmental impact.

Sustainable Yield

The rate at which a natural resource can be harvested without compromising its ability to regenerate or sustain its future productivity.

Renewable Resources

Natural resources that can be replenished at a rate comparable to their consumption, such as solar energy, wind, and biomass.