Multiple Choice
Which of the following is an example of a 'hidden' social cost associated with basing production in a foreign location?
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7. Externalities
Externalities: Social Benefits and Social Costs
Multiple Choice
Which of the following factors is most likely to result in low social costs associated with shipping and handling?
A
Use of outdated vehicles with high emissions
B
Shipping goods over long distances without route optimization
C
Efficient transportation methods that minimize fuel consumption
D
Ignoring packaging waste and disposal practices
Verified step by step guidance1
Step 1: Understand the concept of social costs in the context of shipping and handling. Social costs include both private costs borne by the company and external costs imposed on society, such as pollution and resource depletion.
Step 2: Analyze each option by considering how it affects social costs. For example, outdated vehicles with high emissions increase pollution, raising social costs.
Step 3: Consider the impact of shipping goods over long distances without route optimization. This leads to higher fuel consumption and emissions, increasing social costs.
Step 4: Evaluate the option of efficient transportation methods that minimize fuel consumption. This reduces emissions and resource use, thereby lowering social costs.
Step 5: Reflect on ignoring packaging waste and disposal practices, which can increase environmental harm and social costs. Therefore, the option that minimizes fuel consumption is most likely to result in low social costs.
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