A Properly-Set Pigouvian Subsidy ______ the Price So That the After-Subsidy

question 268

Multiple Choice

A properly-set Pigouvian subsidy ______ the price so that the after-subsidy price sends ______ signal.

• A) raises; the correct
• B) reduces; the correct
• C) raises; an incorrect
• D) reduces; an incorrect

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Definitions:

Retained Earnings Account

A component of shareholders' equity that represents the accumulated portion of net income that a company has not distributed to shareholders as dividends.

Cumulative Earnings

The total amount of profit a company has earned over a specific period, often used to assess profitability trends.

Inception

The beginning point or establishment of an activity, agreement, or document.

U.S.GAAP

The collection of authoritative standards and principles for financial accounting and reporting in the United States, established by the Financial Accounting Standards Board.