Which One of the Following Is an Example of an External

question 246

Multiple Choice

Which one of the following is an example of an external cost?

• A) the cost to attend college
• B) labor costs to a firm
• C) emissions from a factory
• D) a house payment owed by a friend

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Definitions:

Perfect Information

A situation in which all participants have full and equal knowledge of all relevant factors affecting decisions.

EMV

Expected Monetary Value, a decision-making tool used in risk management to calculate the average outcome when the future includes scenarios that may or may not happen.

Medium Potential

A term indicating a moderate level of capacity or ability to achieve or develop something in the future.

Opportunity Losses

The losses incurred by not choosing the best alternative financial option, often considered in decision-making processes to evaluate different investment or business strategies.