An Externality Exists When

question 54

Multiple Choice

An externality exists when

• A) there are private costs.
• B) there are internal costs.
• C) there are external costs.
• D) there are opportunity costs.

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Definitions:

Total Fixed Cost

The sum of all costs that do not change with the level of output in the short term.

Overall Costs

The total expenses incurred in the production, operation, or realization of goods and services.

Average Total Cost

The per unit cost of production, calculated by dividing the sum of all production costs by the quantity of output produced.

Workers

Individuals engaged in physical or mental activity in order to achieve a result, often employed for wages.