When a Publicly Traded CEO's Salary Exceeds $1,000,000, the Employee

question 66

Multiple Choice

When a publicly traded CEO's salary exceeds $1,000,000, the employee ________ taxed on the entire amount, and the employer ________ allowed a deduction on the entire amount.

• A) is; is
• B) is; is not
• C) is not; is
• D) is not; is not

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Definitions:

Nonrival in Consumption

A characteristic of some goods where one person's consumption does not reduce the availability of the good for consumption by others.

Nonexcludable

A characteristic of a good or service where it is not possible to prevent people who have not paid for it from having access to it.

Negative Externality

A cost that is suffered by a third party as a result of an economic transaction.

Pigovian Externality

A situation where a market activity imposes a positive or negative cost or benefit on a third-party that is not reflected in the market price.