When a Subsidy Is Imposed on a Market with a Positive

question 3

Multiple Choice

When a subsidy is imposed on a market with a positive externality: total surplus increases. the market quantity moves closer to the efficient quantity. deadweight loss decreases.

• A)II only
• B)I and II only
• C)I and III only
• D)I, II, and III

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Definitions:

Equipment

Tangible property other than land or buildings that is used in operations of a business, such as machinery or office furniture.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or wear and tear.

Statement Of Cash Flows

An accounting document illustrating the impact of adjustments in balance sheet figures and profits on cash and cash equivalents, separated into operating, investing, and financing sectors.

Indirect Method

A technique used in cash flow statements to adjust net income for changes in non-cash accounts to calculate cash flow from operating activities.