When the Marginal Private Cost of an Activity Does Not

question 127

Multiple Choice

When the marginal private cost of an activity does not equal the marginal social cost,which of the following exists?

• A)Positive externality
• B)Negative externality
• C)Externality in consumption
• D)Externality in production
• E)External cost

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Definitions:

Accumulated Depreciation

The total amount of depreciation that has been recorded against a fixed asset since it was put into use.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been expensed since the asset was put into use.

Fair Market Value

The price that a property would sell for on the open market, between a willing buyer and seller, with both parties having reasonable knowledge of the relevant facts.

Trade-In Allowance

The credit a buyer receives for a used item when exchanging it towards the purchase of a new item.