Externalities Are

question 261

Multiple Choice

Externalities are:

• A) benefits received by people other than the producers and consumers exchanging in the market.
• B) costs paid by people other than the producers and consumers exchanging in the market.
• C) found either in the form of external benefits or external costs.
• D) All of these statements are correct.

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Definitions:

Product Cost

The total expense incurred in creating a product, including materials, labor, and overhead costs.

Indirect Cost

Expenses that are not directly attributable to a specific product or service, such as administrative and facility costs.

Direct Cost

Expenses that can be directly traced to the production of a specific good or service, such as materials and labor.

Period Cost

Costs that are expensed in the period in which they are incurred; often administrative or selling expenses, not directly tied to production.