Suppose the Production of Cotton Causes Substantial Environmental Damage Because

question 60

Multiple Choice

Suppose the production of cotton causes substantial environmental damage because the pesticides used by cotton farmers often make their way into nearby rivers and streams, and are very harmful to fish and other wildlife. Economists would consider the environmental damage that results from the production of cotton to be a(n) :

• A)relevant cost of production.
• B)relevant cost of production only if cotton farmers are charged a fine for the damage done.
• C)relevant cost of production only if the environmental damage negatively affects other firms.
• D)implicit cost of production that cotton farmers will take into account when determining their profit-maximizing level of output.

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Definitions:

Subsidiary Ledger

A detailed ledger that contains the accounts of specific areas of business, supporting data for accounts in the general ledger.

Accounts Receivable

Financial obligations of customers towards a business for delivered products or services awaiting payment.

Discount Period

The time frame within which a payment can be made at a reduced rate.

Asset Account

An account on a balance sheet representing resources owned by a company that have economic value.