An External Cost of Production Will Occur When

question 59

Multiple Choice

An external cost of production will occur when:

• A) common property resources exist
• B) public goods are not provided by the free market
• C) a firm does not consider the total social cost of production when choosing what level of output to produce
• D) a firm does not consider the total social benefit of production when choosing what level of output to produce

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Definitions:

Current Ratio

A financial metric used to assess a company's liquidity by dividing current assets by current liabilities, indicating its ability to pay short-term obligations.

Break-even Point

The break-even point is the point at which total costs equal total revenue, meaning that a business or project is neither making a profit nor suffering a loss.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

Net Margin

A profitability metric calculated as net income divided by revenue, expressing the percentage of revenue that remains as profit after all expenses are deducted.