Imposing a Tax on an Activity That Generates an External

question 171

True/False

Imposing a tax on an activity that generates an external benefit will cause participants in the activity to increase the amount of the activity undertaken.

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Definitions:

Authorized Shares

The maximum number of shares that a corporation is legally permitted to issue, as specified in its charter.

Annual Dividend

The total dividend payment a company declares to distribute to its shareholders annually, often derived from the company's profits.

Incorporator

An individual or entity that participates in the formation of a corporation by filing its articles of incorporation with the relevant state agency.

Corporation

A legal entity that is separate from its owners, who are shareholders, and has its own rights, privileges, and liabilities distinct from those of its members.