Choose the Correct Statement

question 18

Multiple Choice

Choose the correct statement.

• A)Producer surplus is an external cost.
• B)Consumer surplus is an external benefit.
• C)A government subsidy paid to a producer is an external benefit.
• D)Consumer surplus is an external cost.
• E)Subsidies lead to overproduction.

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Definitions:

Small Firms

Companies with a smaller market capitalization, often characterized by higher potential growth and higher risk.

Large Firms

Companies that have a significant market capitalization, often characterized by a large amount of assets, revenues, and employees.

Risk Premium

The additional return expected from an investment for taking on a higher level of risk.

Holding Period

Refers to the duration of time an investment is held by an investor, impacting the tax treatment of any capital gains.