Exhibit 31-1 -Refer to Exhibit 31-1.This Graph Represents a Negative Externality Situation.Given

question 35

Multiple Choice

Exhibit 31-1

-Refer to Exhibit 31-1.This graph represents a negative externality situation.Given this,which of the two curves,X or Y,represents marginal social costs and why?

• A) Curve X, because if there is a negative externality, external costs are associated with it: social costs = external costs + private costs, therefore the marginal social cost curve must lie above the marginal private cost curve.
• B) Curve Y, because if there is a negative externality, negative external costs are associated with it: social costs = negative external costs + private costs, therefore the marginal social cost curve must lie below the marginal private cost curve.
• C) Curve X, because if there is a negative externality, external benefits are associated with it: social costs = external benefits + private costs, therefore the marginal social cost curve must lie above the marginal private cost curve.
• D) Curve Y, because if there is a negative externality, negative external benefits are associated with it: social costs = negative external benefits + private costs, therefore the marginal social cost curve must lie below the marginal private cost curve.

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Definitions:

Cash Dividends

Payments made in cash by a corporation to its shareholder members from its earnings.

Cash Dividends

Cash dividends are payments made by a corporation to its shareholders, representing a distribution of the company's earnings.

Balance Sheet

A financial outline that displays a company's assets, financial obligations, and the ownership interest of shareholders at a determined date.

Net Income

The total profit of a company after subtracting all expenses, taxes, and costs from total revenue.