Which of the Following Statements Is TRUE of External Costs

question 279

Multiple Choice

Which of the following statements is TRUE of external costs?

• A) External costs should not be corrected since people will bear the costs whether they are corrected or not.
• B) There are no good ways to correct for the external costs.
• C) When external costs exist, the price of the good will be deceptively low leading to an overallocation of resources.
• D) External costs should only be corrected for if the correction will not increase the market price.

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Definitions:

Qualification Purposes

The specific reasons or objectives for requiring or seeking a particular certification, status, or level of skill.

Stock of Goods

The inventory of products or goods that a company has on hand to sell to customers.

Independent Distributors

Businesses or individuals that distribute products or services, but are not directly employed by the manufacturers of those products, allowing for operational and financial autonomy.

Internal Affairs

A doctrine in corporate law that allows the internal affairs of a corporation, such as shareholder rights, to be governed by the laws of the state of incorporation.