Which of the Following Is a Method Used by Government

question 3

Multiple Choice

Which of the following is a method used by government to cope with the situation in which production of a good creates an external benefit?

• A) Subsidising production
• B) Imposing Coasian taxes
• C) Running a lottery
• D) Marketable permits
• E) Removing property rights

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Definitions:

Cash Flows

The total amount of money being transferred in and out of a business, especially affecting liquidity.

IRR

The Internal Rate of Return; a financial metric used to estimate the profitability of potential investments.

Equivalent Annual Annuity

A financial term referring to the annual cash flow from an investment over its lifespan, adjusted to reflect equal annual payments.

Cost of Capital

The target earnings rate that a company seeks on investments to preserve its value in the market and gather funds.