Which of These Consumption Activities Will Most Likely Impose an External

question 132

Multiple Choice

Which of these consumption activities will most likely impose an external cost?

• A) an executive plays a vigorous game of golf
• B) a student in a dorm plays a YouTube video at 120 decibels late at night
• C) a young mother exercises to a yoga video
• D) a construction worker eats a sandwich during his lunch break

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Definitions:

Equity Method

An accounting approach used for recording investments in associate companies where the investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the investor's share of the net assets of the investee.

Profit-Oriented Entity

A business whose primary goal is to generate profits rather than focusing on other goals such as social impact or environmental sustainability.

Fair Value

The financial return from disposing of an asset or expense of transferring a liability in a systematic transaction with market entities at the point of measurement.

Carrying Value

The book value of assets and liabilities as reported on the balance sheet, reflecting original cost adjusted for depreciation, amortization, and impairments.