Economics Multiple Choice Question – 5 April 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Which of the following is an external cost of production?

Select ONE answer:

  1. The cost of a public relations campaign in support of a new ‘eco-friendly’ factory
  2. The cost of installing environmentally-friendly equipment in a new factory
  3. The cost of traffic congestion resulting from opening a new factory
  4. The cost of transporting products from a new factory to international retail outlets

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 3

  1. An internal cost which concerns ‘eco-friendliness’ to an external cost.
  2. A cost which applies to environmentally-friendly equipment to an external cost.
  3. Correct: congestion costs as falling on a third party – the community.
  4. A cost which applies to moving products outside the factory to an external cost in an economic sense.

 

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