If There Is No External Cost,then Marginal Social Cost

question 121

Multiple Choice

If there is no external cost,then marginal social cost

• A) increases as output increases.
• B) decreases as output increases.
• C) is constant regardless of the level of output.
• D) is unrelated to output levels.
• E) first increases and then decreases as output increases.

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Definitions:

Interest Rate

The percentage charged on a loan or paid on savings over a specific period, reflecting the cost of borrowing or the reward for saving.

Normal Return

The minimum profit necessary to keep a factor of production in its current use, essentially the opportunity cost of using resources.

Investment

The allocation of resources, such as capital or time, into a venture with the expectation of generating future returns.

Retained Earnings

The portion of net income that is not distributed to shareholders but instead reinvested back into the company.