Externalities Are Defined As

question 108

Multiple Choice

Externalities are defined as:

• A)any transaction external to the firm.
• B)costs or benefits that fall on third parties.
• C)policies that firms adopt to sell products outside the country.
• D)managers' dealings with stockholders outside the firm.
• E)costs of maintaining plant and equipment to avoid the scrutiny of external auditors.

---

Definitions:

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a specified period of time.

Long Run

A period in which all factors of production and costs are variable, allowing firms to adjust to meet changes in the market.

Industry Entry

The process of a new competitor or company beginning operations in a specific market or industry.

MR

Marginal Revenue, the additional income that is gained from selling one more unit of a product or service.