External Costs Occur Because

question 89

Multiple Choice

External costs occur because

• A) Private costs do not reflect the full costs to society.
• B) Government failure increases costs for the firm.
• C) All costs are absorbed by the firm.
• D) Firms make a choice other than the most cost-efficient production method. External cost is a cost of a market incurred by a third party.

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Definitions:

Congressional Budget Office

A federal agency within the United States that provides economic data and budget and economic analyses to Congress.

Pie Chart

A circular statistical graphic divided into slices to illustrate numerical proportions. Each slice represents a category's portion of the whole.

Administrative Branch

This term could be a misnomer for the executive branch of government, which is responsible for implementing and enforcing laws.

Economic Data

Quantitative or qualitative information that describes one or more aspects of the economic activities within a society or sector.