What Is Marginal External Cost? Give an Example

question 19

Essay

What is marginal external cost? Give an example.

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Definitions:

Cost Center

A department or segment within a company where costs can be allocated, but that does not directly contribute to profit, primarily used for budgeting and control purposes.

Investment Center

A business unit or division that is responsible for its own revenues, expenses, assets, and returns, and is evaluated on its profitability and efficiency in using its assets.

Profit Center

A department or unit within an organization that is responsible for generating revenue and is evaluated based on its profitability.

Service Department

A segment within a business that supports other departments by providing internal services or activities.