If There Are Significant External Costs Associated with the Production

question 128

Multiple Choice

If there are significant external costs associated with the production of a product, it can be said that the private cost of production to the firm ____ the cost to society associated with this product and output should ____ to move toward the efficient situation.

• A)​overstates; increase
• B)​understates; increase
• C)​overstates; decrease
• D)​understates; decrease

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Definitions:

Company's Operation

The day-to-day activities involved in running a business, which can include production, marketing, and management functions.

Internal Stakeholders

Individuals or groups within an organization who are directly affected by its activities, such as employees, managers, and owners.

External Stakeholders

Individuals or groups outside of a corporation who are affected by the corporation's operations, such as suppliers, customers, and the community.

Past Data

Historical information or records that are used as a reference or guide for decision-making, planning, and forecasting in business or research.