Which Is an Example of an External Cost

question 191

Multiple Choice

Which is an example of an external cost?

• A) secondhand smoke
• B) increased gas prices for drivers of SUVs
• C) the cost you pay your plumber to install a new hot water heater
• D) your high electric bill that results from leaving your lights on all night

Identify examples of fixed, variable, and sunk costs in various business scenarios.

Compute fixed costs from total costs and variable costs.

Understand the distinction between accounting profit and economic profit.

Calculate accounting profit using total revenue and explicit costs.

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Definitions:

Integer Models

Mathematical models that involve decision variables restricted to integer values, commonly used in optimization for solving problems in areas such as scheduling and resource allocation.

Solver

A software tool that finds the optimal solution to a mathematical problem by varying multiple inputs within certain constraints.

Discontinuous

Refers to a function or process that exhibits breaks, jumps, or gaps in its domain or range.

Integer Linear Optimization Models

Mathematical models used in operations research that seek to maximize or minimize a linear objective function subject to a set of linear constraints and integer variables.