If Firms Have to Account for External Costs in Production

question 59

Multiple Choice

If firms have to account for external costs in production, then they will produce an output level that is ________ the efficient level.

• A) at
• B) below
• C) above
• D) either above or below

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Definitions:

Total Dollar Amount

The aggregate or total value expressed in dollars; often refers to the total sum of money involved in a transaction or financial statement item.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations, calculated as current assets divided by current liabilities.

Current Liabilities

Short-term financial obligations that are due to be paid within one fiscal year or the operating cycle, whichever is longer.

Non-current Liabilities

Non-current liabilities are obligations a company owes that are not expected to be paid within the next twelve months, including long-term loans, bond payables, and deferred tax liabilities.