A Negative Externality Exists and Government Wants to Impose a Per-Unit

question 68

Multiple Choice

A negative externality exists and government wants to impose a per-unit tax in order to bring about the socially optimal output. To accomplish its objective, government must set the tax equal to marginal

• A)private cost.
• B)social benefit.
• C)external cost.
• D)social cost.
• E)private benefit.

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Definitions:

GAAP Hierarchy

A framework that categorizes the importance and authority of different accounting principles and guidelines in the U.S. Generally Accepted Accounting Principles (GAAP).

Valuation Method

Techniques or approaches used to determine the market value of assets, businesses, or financial instruments.

Historical Costs

The original monetary value of an asset or liability, without adjusting for inflation or changes in market value.

Economic Resources

Assets owned by businesses or individuals that have the ability to produce value or generate income in the future.