Bargaining Costs Are Generally High in Cases Involving Environmental Externalities

question 11

Multiple Choice

Bargaining costs are generally high in cases involving environmental externalities because

• A)there are strong incentives to be a free rider.
• B)many individuals may be affected by the externalities.
• C)it is difficult to measure the costs of the externalities.
• D)all of the above.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable costs are deducted, indicating the capability of covering fixed costs and generating profit.

Variable Manufacturing Costs

Costs that vary in total directly and proportionately with changes in the production volume, including direct materials, direct labor, and variable manufacturing overhead.

Selling Commission

A fee paid to a salesperson or agent for facilitating a sale, typically a percentage of the sale price.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportion of fixed versus variable costs a company has.