Which of the Following Is True of Positive Consumption Externalities

question 179

Multiple Choice

Which of the following is true of positive consumption externalities?

• A)social value exceeds private value and market quantity exceeds socially optimal quantity
• B)social value is less than private value and market quantity exceeds socially optimal quantity
• C)social value exceeds private value and market quantity is less than socially optimal quantity
• D)social value seldom exceeds private value and therefore social quantity is less than private quantity

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Definitions:

Accrual

The accounting method that records revenues and expenses when they are earned or incurred, regardless of when the cash is actually received or paid.

Prepaid Rent

An asset account that represents rent payments made in advance of the rental period to which they relate.

Normal Balance

Normal Balance refers to the typical or expected balance side (debit or credit) of an account based on double-entry bookkeeping principles.

Financial Statement

Formal records that outline the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.