An external cost is created when you
A) graduate from college.
B) buy flowers for your mother on Mother's Day.
C) litter on the side of the road.
D) buy a sandwich for lunch.
Answer: C
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Going skiing will cost Adam $80 a day. He also loses $40 per day in wages because he has to take time off from work. Adam still decides to go skiing
A) His decision is rational if Adam's marginal benefit of spending a day skiing is greater than his marginal cost. B) The $80 price of skiing is not an opportunity cost and so did not affect Adam's decision. C) He loses a total of $120 per day, so his decision is irrational. D) Adam's lost $40 per day in wages is not an opportunity cost and so did not affect his decision. E) Adam is definitely making a decision that is in the social interest.
When all markets in the economy are simultaneously in equilibrium, we say
A) markets are complete. B) markets are perfect. C) there is disequilibrium. D) there is general equilibrium.