If a Firm Produces a Good and Its Consumption Generates

question 120

Multiple Choice

If a firm produces a good and its consumption generates external benefits,then at the competitive market equilibrium

• A)the government could subsidize the production of this good to improve efficiency.
• B)the marginal private benefit is greater than the marginal cost of producing the last unit.
• C)the output would be more than the socially optimal amount.
• D)the firm will not produce an additional amount if it can internalize the external benefits.
• E)the marginal social benefit is less than the marginal cost of producing the last unit.

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Definitions:

Consolidated Goodwill

An intangible asset that appears when a parent company acquires a subsidiary and is recorded after consolidation processes.

Acquisition Transaction

An acquisition transaction is a business deal in which one company purchases most or all of another company's shares to take control.

Stockholders' Equity Figures

The total value of a company's equity that belongs to shareholders, calculated as total assets minus total liabilities.

Separate Corporate Existence

The legal principle that a corporation exists independently from its owners, with its own rights, liabilities, and obligations.