When the Costs of an Action Are Not Fully Borne

question 121

Multiple Choice

When the costs of an action are not fully borne by the two parties engaged in a transaction, this is called a(n)

• A) externality.
• B) equilibrium.
• C) property right.
• D) internal cost.

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Definitions:

Net Loss

The amount by which a company's expenses exceed its revenues over a specific period, indicating a decrease in net assets.

Discontinued Operations

Components of a company's business that have been disposed of or are classified as held for sale, and whose financial results are separated from ongoing operations.

Extraordinary Items

Events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence, providing insight into a company's financial health.

Continuing Operations

The parts of a business expected to continue for the foreseeable future, excluding any discontinued operations.