Which of the Following Activities Represents an External Cost

question 119

Multiple Choice

Which of the following activities represents an external cost?

• A) the increase in local property values when the city creates a neighbourhood park
• B) the price you pay for the prime ribs that you consume at a local restaurant
• C) the reduction in the incidence of chicken pox when children are inoculated against the disease
• D) the damage to a person's health from second-hand smoke

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Definitions:

Decision Making

The method of recognizing and selecting options according to the decision-maker's values, preferences, and convictions.

Cooperation

The process of groups of organisms working or acting together for common, mutual, or some underlying benefit, as opposed to working in competition for selfish benefit.

Functional Structure

An organizational design that groups employees by their similar skills, resource use, and expertise.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.