A Negative Externality Exists When

question 150

Multiple Choice

A negative externality exists when

• A)a person's or group's actions cause a benefit that is felt by others.
• B)a person's or group's actions cause a cost that is felt by others.
• C)market output is less than socially optimal output.
• D)a and c
• E)b and c

Recognize the accounting entries related to stock transactions including issuance, dividend payments, and acquisition of assets through stock.

Understand the determination and impact of declaring cash dividends on shares.

Comprehend the concept and recording of paid-in capital in excess of par.

Recognize the circumstances under which a liability for dividends exists.

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Definitions:

Opportunity Cost

Dismissing potential benefits from other possible choices by focusing on one.

Scarce Resources

Natural or human resources that are limited in supply and cannot fulfill all wants and needs due to their finite availability.

Free Lunch

An idiom expressing the idea that it is impossible to get something for nothing; in economics, it refers to the impossibility of getting a benefit without a cost.

Scarce

Limited in availability relative to the demand.