If a Firm Is NOT Forced to Pay for External

question 101

Multiple Choice

If a firm is NOT forced to pay for external costs, it will

• A) continue to overproduce the good.
• B) continue to under produce the good.
• C) request a subsidy from the government.
• D) raise prices.

---

Definitions:

Amortized

A process of paying off debt in regular installments over a period of time, where each payment is partially principal and partially interest.

Compounded Semi-annually

Refers to the process of calculating interest on both the initial principal and the accumulated interest from previous periods twice a year.

Amortization Schedule

A table detailing each periodic payment on an amortizing loan (typically a mortgage), as well as how much of each payment is interest versus principal and the balance remaining after each payment.

Compounded Semi-annually

Interest calculation method where interest is added to the principal sum of a loan or deposit twice a year, resulting in interest earning interest.