A Private Agreement Between Bargainers May Not Take Place Because

question 175

Multiple Choice

A private agreement between bargainers may not take place because of

• A)free-rider problems.
• B)negative externalities.
• C)the tragedy of the commons.
• D)positive externalities.
• E)all of these.

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Definitions:

Unit Variable Cost

The cost associated with producing one additional unit of a product, which includes labor, materials, and other variable expenses.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Total Costs

The complete sum of all expenses, both fixed and variable, incurred in the production of goods or services.

Break-even Quantity

The number of units that must be sold to cover all costs, after which profit begins to be generated.