A Marginal External Cost of a Product Is Equal to

question 65

Multiple Choice

A marginal external cost of a product is equal to

• A) the cost someone other than the producer incurs when another unit is produced.
• B) what the producer has to pay to hire resources to produce another unit.
• C) what the consumer must pay when he or she buys the good or service.
• D) the cost the producer incurs to produce another unit.
• E) None of these answers describes a marginal external cost.

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Definitions:

Prepaid Expense

An expense that has been paid in advance and is considered an asset until it is actually used or consumed.

Rental Payments

Rental payments are periodic payments made by a lessee to a lessor for the use of a property, equipment, or vehicle.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Balance Sheet

A statement that displays the financial standing of a company, including what it owns, owes, and the value held by investors, at a given time.