Externalities Are Defined As

question 108

Multiple Choice

Externalities are defined as:

• A)any transaction external to the firm.
• B)costs or benefits that fall on third parties.
• C)policies that firms adopt to sell products outside the country.
• D)managers' dealings with stockholders outside the firm.
• E)costs of maintaining plant and equipment to avoid the scrutiny of external auditors.

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Definitions:

Profit Maximizing

The process or strategy of adjusting production and operation levels to achieve the highest possible profit.

Shutdown Condition

A criterion in economics indicating the point at which a firm's revenue is not sufficient to cover its variable costs, prompting it to cease operations.

Marginal Cost Curve

A curve that graphically represents the cost of producing one additional unit of a good, typically illustrating how marginal cost varies with the quantity produced.

Competitive Firm

A company operating in a market where it has to set its prices based on the market conditions because it has little to no influence over the market prices.