Question

Using economic tools to promote sustainability Every consumer product carries internal costs and external costs. Which of the following are usually internal costs—that is, costs that are included in the market price—of a car? Check all that apply. Cost of mitigating damage to buildings by acid rain Reduction in economic productivity due to traffic jams Long-term health costs of driving instead of choosing physically active transportation options Cost of fuel used in transporting cars and car parts Wages paid to workers in car factories

Answer 1

Answer:

Wages paid to workers in car factories

Explanation:

Internal cost are the cost included in the price of a product or good while external cost are third-party cost, they are cost incurred as a result of the use of a product.

Wages paid to workers in car factories are included in the price of the car and as such are considered as internal cost.  

Answer 2

Answer: c. Cost of fuel used in transporting cars and car parts.

d. Wages paid to workers in car factories.

Explanation:

Internal cost is the monetary price paid for the processes involved in constructing, managing and designing a particular product. These costs directly affect the business production processes. Examples include the cost of machinery, fuel, labor, etc.

External costs, however, are the price paid for harm or damage done to the environment or society. They do not directly affect business production processes. The society pays for it through tax.

In the list of options provided, the cost of fuel used in transporting cars and car parts directly affects the business. So also, is the cost of labor.