Which of the Following Is an Example of an Externality

question 18

Multiple Choice

Which of the following is an example of an externality?

• A)the cost of building infrastructure
• B)the cost of producing a car
• C)the cost of environmental damage
• D)the cost of workers' wages

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often receiving dividends before common shareholders.

Subscriptions Receivable-Common Stock

The amount owed to a company from subscribers who have committed to buy its common stock but have not yet paid.

Common Stock Subscribed

Temporary stockholders’ equity account that records at par value stock that has been subscribed to but not fully paid for.

Organization Expense

These are initial costs incurred in the process of starting a business, such as legal fees, state fees, and promotional expenses, which may be expensed or capitalized over time.