It Is True of Externalities That They

question 146

Multiple Choice

It is true of externalities that they

• A)arise when all costs, social and private, are included in production cost.
• B)are always beneficial.
• C)are always detrimental.
• D)None of the above are correct.

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Definitions:

Rate of Return

The percentage of net gain or loss on an investment over a specified time period.

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting the operational activities.

Annual Payment

A recurring payment made once a year for a variety of purposes, including loan repayments, leases, and annuities.

Perpetuity

A type of annuity that pays a fixed amount of money to an individual indefinitely, without a termination date.