A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account. A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures. A negative externality exists that has not been corrected. Price and quantity will be
Definitions:
Capital Expenditures
Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment to improve its long-term operations and growth.
Cash Dividends
A portion of a company's earnings distributed to shareholders in the form of cash.
Direct Method
A way of preparing the cash flow statement where actual cash flow information from the company’s operations is directly reported.
Accounts Receivable
The amount of money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.
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