When a Negative Externality Exists in a Market, the Cost

question 170

Multiple Choice

When a negative externality exists in a market, the cost to producers

• A)is greater than the cost to society.
• B)will be the same as the cost to society.
• C)will be less than the cost to society.
• D)will differ from the cost to society, regardless of whether an externality is present.

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Definitions:

Business Transactions

Financial activities or operations that involve an exchange of goods, services, or funds between two or more parties.

Equity Securities

Equity securities represent an ownership interest held in a company by individuals or firms in the form of stocks.

Classification

The process of organizing data or items into categories based on their similarities, properties, or characteristics.

Accounting Method

An accounting method is a set of rules that determine how and when income and expenses are recorded in the financial statements.