Which of the Following Represents the True Economic Cost of Production

question 217

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:

Long Position

A financial strategy where the investor purchases a security with the expectation that its value will rise over time.

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial asset at a predetermined price at a specific time in the future.

Clearinghouse

Established by exchanges to facilitate transfer of securities resulting from trades. For options and futures contracts, the clearinghouse may interpose itself as a middleman between two traders.

Taxation

The process whereby authorities impose financial charges on individuals or legal entities, which can have implications for investment decisions.