Pollution Is Considered an External Cost Because

question 51

Multiple Choice

Pollution is considered an external cost because:

• A) it has a harmful effect borne only by people who purchased the product that caused it.
• B) its cost to the environment is not reflected in the price of the product that produces it.
• C) it has a significant impact on the consumer's decision to buy the product that causes it.
• D) it is a hidden cost that would produce increased demand if the consumer were aware of it.
• E) it is an advertised cost that may affect consumer demand for a given product.

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Definitions:

Social Security

A government system that offers financial assistance to people in the form of retirement benefits, disability income, and other payments.

Medicare

A federal health insurance program in the United States for people aged 65 and over, as well as for some younger people with disabilities.

Payroll Deductions

Amounts subtracted from an employee's gross salary for taxes, insurance premiums, benefits, and other payroll-related charges.

Liabilities

Debts or duties a firm has towards third parties, necessitating repayment through the allocation of economic advantages over time.