An Example of the External Costs Due to Automobile Driving

question 13

Multiple Choice

An example of the external costs due to automobile driving is

• A) wear and tear on toll roads.
• B) the opportunity cost of the driver's time.
• C) air pollution due to exhaust fumes.
• D) the cost of washing dirty cars.

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Definitions:

Marginal Social Cost

The total cost to society of producing an additional unit of a good or service, including both the private costs and any external costs.

Market Price

The current rate at which a product or service is available for purchase or sale in an open market.

Congestion Fee

A congestion fee is a charge imposed on users of a crowded public goods, such as city roads or public transit systems, intended to reduce traffic congestion and improve air quality.

Internalize Costs

The process of ensuring that businesses or individuals take into account the external costs they impose on society in their decision-making.