When an Activity Like Education Generates a Positive Externality, The

question 21

Multiple Choice

When an activity like education generates a positive externality, the:

• A)market demand curve is below the marginal social benefit curve.
• B)market demand curve is above the marginal social benefit curve.
• C)marginal cost of production is below the market demand curve.
• D)market will produce more than the efficient level of output.

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Definitions:

Adjusting Entry

An amended bookkeeping entry made to rectify or allocate transactions to the appropriate accounting period or ensure that revenues and expenses are recorded in the period they occur.

Doubtful Accounts

Accounts receivable that a company believes might not be collected due to credit risk.

Allowance Method

An accounting technique used to estimate and anticipate uncollectible accounts receivable and bad debts.

Reinstated Account

An account previously closed or inactivated that has been restored to active status.