Which of the Following Is True of a Negative Externality

question 99

Multiple Choice

Which of the following is true of a negative externality?

• A) Some costs are borne by a third party.
• B) The government can use subsidies to encourage firms to internalize the externality.
• C) The government must take over the production of this good so that the externality can
• Be internalized.
• D) Some benefits accrue to a third party.
• E) Its existence always requires corrective measures by the government.

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Definitions:

Gross Profit

Income after deducting only the cost of goods sold from revenue, indicating the efficiency of a company's production process.

Manufactured Units

Items or products that have been produced or fabricated in a manufacturing process.

Sold Units

The quantity of product units sold within a specific time period.

Net Income

The total profit of a company after subtracting all expenses from revenue.