The Graph Shown Displays a Market with an Externality

question 85

Multiple Choice

The graph shown displays a market with an externality. The external _______ is _______.

• A)cost; $3
• B)cost; $5
• C)benefit; $3
• D)benefit; $5

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Definitions:

Going-concern Assumption

An accounting principle that assumes a business will continue to operate indefinitely, rather than being liquidated.

Financial Statements

Standardized documents that provide an overview of a company's financial performance and position, including the balance sheet, income statement, and cash flow statement.

Operating

Pertains to the regular, ongoing activities of a business that are involved in the production or sale of goods and services.