Question

6    The costs of a market activity paid for by an individual NOT engaged in the market activity are ________ costs.

a.	External	d.	social
b.	Internal	e.	common
c.	free-rider

7.    An external cost is best defined as the cost of an activity paid for by

a.	the individual who is engaged in the activity.
b.	the government.
c.	a third party.
d.	a free-rider.
e.	the individual and the third party.

4.    The personal decisions of consumers and firms are based on ________ cost(s).

a.	External	d.	third-party
b.	Social	e.	public-good
c.	Internal

8. The cost of an activity paid for by the individual and the third party is defined as a(n) ________ cost.

a.	Internal	d.	third-party
b.	Social	e.	public-good
c.	External

Answer 1

6. Option A.

• The costs of a Market activity paid for by an individual not engaged in the market activity are external costs.
• The external costs are those costs that are incurred by the third party for the activities in which they were not active participants or in other words the third parties pay for the action's of those who were directly involved.

7. Option C.

• An external cost can be best described as the cost of an activity paid for by a third party as they face the consequences of the action's performed by the actual parties.

4. Option C.

• The personal decisions of consumers and firms are based on internal costs.
• Internal costs are those costs that are paid those parties who were directly involved in that activity involved within an organisation.

8. Option D.

• The cost of an activity paid for by the individual and the third party is defodef as a third party cost.
• They are the costs that an individual or a third party incurs for the activities he did not agree upon.