Which of the Following Represents the True Economic Cost of Production

question 197

Multiple Choice

Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?

• A)The private cost of production
• B)The social cost of production
• C)The external cost of production
• D)The explicit cost of production

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Definitions:

Policy

In insurance law, a contract for insurance coverage. The policy spells out the precise terms and conditions as to what will and will not be covered under the contract.

Potential Loss

The possibility of experiencing a negative outcome, often calculated in terms of financial impact.

Risk

A prediction concerning potential loss based on known and unknown factors.

Hazard

A potential source of harm or adverse health effect on a person or persons.