Which of the Following Would Be Classified as an External

question 67

Multiple Choice

Which of the following would be classified as an external cost (negative externality) ?

• A) You are not able to study at night because there is so much noise coming from the room next to yours.
• B) A private firm will not provide national defence since it is impossible to confine the benefits to only those individuals who have paid for it.
• C) When you purchase a product, the cost is higher than you originally anticipated.
• D) As more firms began hiring computer programmers, the salaries of computer programmers increased and therefore the firm's cost of production increased.

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Definitions:

Stock Price

The cost of purchasing a share of a company, which fluctuates based on market demand, company performance, and economic conditions.

Put Option

An option contract in finance that grants the buyer the privilege to sell a specific amount of an underlying asset at an agreed price, within a designated period, without the necessity to proceed.

Strike Price

The predetermined price at which the buyer of a call option can purchase, or the buyer of a put option can sell, the underlying security or commodity.

Market Price

The present cost at which a service or asset is available for purchase or sale on the public market.