When an External Cost Associated with the Production of Some

question 30

Multiple Choice

When an external cost associated with the production of some good has been internalized,it means that

• A)the opportunity cost of production is passed on to the consumer.
• B)the private cost of production is borne by the producer.
• C)the external costs are incorporated into private decision making.
• D)the consumer is bearing the net social benefits imposed by the producer.
• E)the firm is ignoring social costs.

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Definitions:

Comparative

Relating to the analysis of financial information by comparing data from different time periods or entities.

Prior-period Information

Financial information related to a previous reporting period that is used for comparison or adjustment purposes in current financial statements.

Disclosure

The act of providing important information to shareholders and the public, which is typically mandated by law or regulations.

Accounting Policies

The specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements.