An Example of an Activity That Generates an External Cost

question 404

Multiple Choice

An example of an activity that generates an external cost is

• A) dumping soapsuds into a trout stream.
• B) national defense services.
• C) planting flowers along an interstate highway.
• D) eating an apple.

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Definitions:

Fair Value

The estimated market price of an asset or liability, reflecting current market conditions.

Par Value

A nominal value or face value assigned to a share of stock by the company’s charter.

Acquisition Method

The accounting method used to consolidate the financial statements of a parent company and its acquired subsidiary.

Business Combinations

Occurs when one company acquires control over another, either through the purchase of shares, assets, or a merger.