If a Good That Involves External Costs Is Priced to Take

question 49

Multiple Choice

If a good that involves external costs is priced to take these costs into account,then its price will likely:

• A)fall,and output will likely rise.
• B)rise,and output will likely fall.
• C)not change,but output will likely fall.
• D)rise,but output will likely stay the same.

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Definitions:

Contingent Payment

A payment that depends on achieving certain conditions or outcomes in the future.

Market Value

The current quoted price at which an asset or a company can be bought or sold on the open market.

Probability-Weighted

A method that takes into account the likelihood of various outcomes, often used in financial forecasting and risk assessment to estimate future cash flows or earnings.

Time Value

The concept in finance that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.