Which of the Following Activities, If Any, Represents an External

question 9

Multiple Choice

Which of the following activities, if any, represents an external cost?

• A)​The reduction in the incidence of chicken pox when children are inoculated against the disease.
• B)​The damage to a person's health from secondhand smoke.
• C)​The increase in local property values when the city creates a neighborhood park.
• D)​The price you pay for the prime rib that you consume at a local restaurant.

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Definitions:

Lower of Average Cost

A method to value inventory at the lower of its historical average cost or the market cost, ensuring a conservative asset valuation.

Estimated Inventory

An approximate calculation or judgment of the quantity of goods available in stock.

Cost-to-Retail Ratio

A method used in inventory accounting that calculates the cost of goods available for sale as a percentage of the retail price of the goods.

Net Markdowns

Net markdowns represent the reduction in the selling price of goods or products, often reflecting changes in market demand or stock clearance needs, net of any markdown cancellations.