When the Government Intervenes in Markets with Externalities, It Does

question 306

Multiple Choice

When the government intervenes in markets with externalities, it does so in order to

• A)increase production when negative externalities are present.
• B)protect the interests of bystanders.
• C)make certain all benefits are received by market participants.
• D)reduce production when positive externalities are present.

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Definitions:

Operating Assets

Assets that are used in the day-to-day operations of a business to generate income, including both current and long-term assets.

Net Operating Income

A financial metric that calculates a company's profitability by subtracting operating expenses from its total revenue, excluding taxes and interest.

Residual Income

The amount of income that an individual has after all personal debts and expenses have been paid.

Hum Division

A fictitious or specific name for a division within a company, which may focus on a particular area of business or product line.