Which of the Following Is an Example of an External

question 115

Multiple Choice

Which of the following is an example of an external cost?

• A)Unemployment.
• B)Unfair pricing behavior by a monopoly.
• C)Automobile exhaust fumes.
• D)Eating a sandwich at a local deli

---

Definitions:

Capital Flow

The movement of money for the purpose of investment, trade, or business production, either within a country or internationally.

Tax Shifting

The transfer of the burden of a tax from the entity legally responsible for paying it to another party, often consumers, through higher prices.

Tax Evasion

The illegal practice of not paying taxes by not reporting income, reporting expenses not legally allowed, or by not paying taxes owed.

Corporate Profits Tax

A tax imposed on the income or profit earned by corporations.