Which of the Following Statements Is Correct

question 535

Multiple Choice

Which of the following statements is correct?

• A)Government should tax goods with either positive or negative externalities.
• B)Government should tax goods with negative externalities and subsidize goods with positive externalities.
• C)Government should subsidize goods with either positive or negative externalities.
• D)Government should tax goods with positive externalities and subsidize goods with negative externalities.

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Definitions:

Income Taxes

Taxes imposed by the government on the income generated by businesses and individuals within their jurisdiction.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Cash Budget

Budget that shows cash inflows and outflows during a period of time.

Shareholders' Equity

The portion of a company's assets that belongs to shareholders after liabilities have been subtracted; also known as net assets or equity.