Which of the Following Constitutes an External Cost of Driving

question 185

Multiple Choice

Which of the following constitutes an external cost of driving an automobile?

• A) insurance
• B) fuel
• C) pollution
• D) wear and tear

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Definitions:

Variable Costs

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Fixed Overheads

Costs that do not vary with the level of production or sales activity, such as rent, salaries, and insurance.

Variable Cost Per Unit

The amount of variable expenses incurred to produce one unit of a product or service.

Budgeted Hours

The number of hours allocated or planned for a particular task, project, or period, usually part of a financial or operational plan.