When we purchase a product, the price we pay directly reflects the _____ cost of producing it. If the manufacture of the product degrades the quality of air or water, then the costs of this pollution are termed _____ costs.

Question

Quizplus · Accepted Answer

The price we pay for a product directly reflects the internal cost of producing it, which includes materials, labor, and overhead. If the manufacture of the product causes pollution, the costs associated with this pollution are not borne by the producer or reflected in the price; instead, they are external costs, affecting third parties and the environment.

When We Purchase a Product, the Price We Pay Directly