The Social Costs of an Activity Are Greater Than the Private

question 85

Multiple Choice

The social costs of an activity are greater than the private costs of the activity when

• A) a person does not pay all costs associated with a particular resource-using activity.
• B) the internal costs of the resource-using activity are less than the external costs of the activity.
• C) the internal costs of the resource-using activity are positive.
• D) the external costs of the resource-using activity are zero.

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Definitions:

Automotive Repair Shop

A business establishment dedicated to repairing and maintaining vehicles, including cars and trucks.

Wages of Mechanics

Compensation paid to mechanics for their labor, typically based on an hourly rate or salary.

Conversion Cost

The sum of labor and overhead expenses incurred to convert raw materials into finished products.

Direct Materials Cost

The cost of raw materials that are directly used in the production of a product.