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.

Comprehend the mechanisms and approaches to prevent escalation of commitment to failing projects.

Recognize the factors that contribute to poor decision making, including stress and group dynamics.

Understand the fundamental principles of depth perception and distance cues.

Grasp the concept of perceptual constancy, including size, shape, and lightness constancy.

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Definitions:

Ledger

A group of accounts for a business.

Price And Quantity Variances

The difference between the actual and expected costs, analyzed through the perspectives of price paid and the quantity used.

Standard Costs

Standard costs are the expected costs of manufacturing a product under normal conditions, including direct labor, direct materials, and factory overhead.

Standard Costs

Predetermined or estimated costs used for planning and control purposes in budgeting and cost management.