An External Cost

question 20

Multiple Choice

An external cost:

• A) causes markets to allocate resources efficiently.
• B) affects producers but not consumers.
• C) is a cost paid by people other than the producer or consumer trading in the market.
• D) leads to economic efficiency only when private costs are greater than external costs.

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Definitions:

Natural Environment

The physical surroundings in which living organisms interact, including land, water, air, natural resources, and all living things.

Economic Sectors

Categories of the economy based on their main activities, such as agriculture, manufacturing, and services.

Work Practices

The customary methods and operations employed by employees or within an organization to accomplish tasks and goals.

Technologies

The application of scientific knowledge for practical purposes, especially in industry and our daily lives.