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A Judge Rules That a Lawn Mower Manufacturer Must Pay

question 46

Multiple Choice

A judge rules that a lawn mower manufacturer must pay a liability settlement to a consumer who was injured using a defectively produced lawn mover.The cost of the settlement represents what type of cost to the manufacturer?


Definitions:

Externality

An economic term describing an indirect effect of a transaction not reflected in the market price, affecting third parties who did not choose to be involved.

Hydroelectric Power

Energy generated by converting the energy of falling or flowing water into electricity, commonly through the use of dams.

Overproduction

A situation where the supply of a product exceeds the demand for it, often leading to a fall in prices and profitability.

External Cost

Refers to the negative effects an activity imposes on unrelated third parties without compensation for the incurred costs.

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