If You Burn Your Trash in the Backyard in Spite

question 242

Multiple Choice

If you burn your trash in the backyard in spite of regulations against it, then you are

• A)acting economically irrationally and creating a social cost.
• B)avoiding the private costs associated with disposing your trash some other way and creating a social cost.
• C)acting rationally and creating a positive externality.
• D)saving landfill space and creating a social benefit.

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Definitions:

Total Fixed Costs

The sum of all costs that do not change with the level of output or activity within a certain period.

Cost-Volume-Profit Analysis

The examination of the relationships among selling prices, sales and production volume, costs, expenses, and profits.

Contribution Margin

The amount of revenue remaining after deducting variable costs, which contributes to covering fixed costs and generating profit.

Gross Profit

The financial metric indicating the difference between revenue and the cost of goods sold, showcasing how efficiently a company is producing or sourcing its products.