An Externality Can Be a Cost or Benefit Arising from the Production

question 3

Multiple Choice

An externality can be a cost or benefit arising from the production of a good that falls upon

• A) consumers but not producers.
• B) producers but not consumers.
• C) both the consumer and the producer.
• D) someone other than the consumer or producer.
• E) no one, so it goes unpaid.

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Definitions:

Economic Expansion

A phase of the business cycle where economic activity and output increase, indicating growth in the economy.

EBIT

Earnings Before Interest and Taxes - a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Capital Structure

The mix of debt, equity, and other securities that a company uses to finance its overall operations and growth.

Lend Out

The act of providing money or assets to another party with the expectation that it will be returned or repaid, often with interest.