Which term best describes the estimated economic loss caused by all motor vehicle accidents in a country within a given year?

• A. External cost
• B. Opportunity cost
• C. Marginal benefit
• D. Consumer surplus

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of 'economic loss' in the context of motor vehicle accidents. This refers to the total cost to society, including damages, medical expenses, lost productivity, and other negative effects.
2. Step 2: Review the definitions of the given terms: External cost, Opportunity cost, Marginal benefit, and Consumer surplus.
3. Step 3: Recognize that 'External cost' (also called externality) refers to costs imposed on third parties or society that are not reflected in the market price of a good or service.
4. Step 4: Identify that motor vehicle accidents create costs borne by others (e.g., victims, healthcare system, property damage) beyond the drivers involved, which fits the definition of an external cost.
5. Step 5: Conclude that the term 'External cost' best describes the estimated economic loss caused by all motor vehicle accidents in a country within a given year.