If It Costs $2,000 to Pick Up the Litter Along

question 1

Multiple Choice

If it costs $2,000 to pick up the litter along a highway, then the cost of the externality is:

• A) $0.
• B) more than $0, but less than $2,000.
• C) $2,000.
• D) more than $2,000, but finite.
• E) infinite.

---

Definitions:

Discount

A reduction applied to the usual cost of goods or services or the process of determining the present value of future cash flows.

Net 45

A payment term indicating the buyer must complete payment within 45 days from the invoice date.

Break-Even Point

The point at which total costs and total revenues are equal, meaning there is no net loss or gain.

Variable Cost

Costs that vary directly with the level of production or output, such as materials and labor expenses.