When a Factory Dumps Toxic Waste into a River and Pollutes

question 32

Multiple Choice

When a factory dumps toxic waste into a river and pollutes the river,the costs borne by society in order to clean up the mess is called a(n) :

• A) externality.
• B) internal diseconomy.
• C) internal economy.
• D) natural monopoly.

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Definitions:

MUₐ /Pₐ

The ratio of marginal utility (MUₐ) to the price (Pₐ) of an item, often used in consumer choice theory to evaluate optimal consumption.

Maximize Utility

The process of allocating resources to get the highest possible satisfaction for an individual or a society.

Consumer's Budget Line

A graphical representation of all possible combinations of two goods that a consumer can purchase, given their income and the prices of the goods.

Price of A

The cost assigned to a specific product or service "A", determined by various factors like production costs, supply, and demand.