The Three Main Methods That Governments Use to Cope with an External

question 156

Multiple Choice

The three main methods that governments use to cope with an external cost of production include all of the following EXCEPT

• A) taxes.
• B) mandating clean technology.
• C) cap-and-trade
• D) price floors.

Describe the characteristics of perfect competition and the behavior of firms within it.

Explain the difference between short-run and long-run profit maximization and loss minimization.

Differentiate between explicit and implicit costs and their role in determining economic profit.

Recognize the conditions under which a firm maximizes profit, minimizes loss, or breaks even, including the role of average total cost (ATC), marginal cost (MC), and marginal revenue (MR).

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Definitions:

Agency Relationship

A legal arrangement in which one party, the agent, is authorized to act on behalf of another, the principal, in business transactions or other matters.

Bankruptcy

The legal process by which the assets of a debtor are sold to pay off creditors so that the debtor can make a fresh start financially.

Operation Of Law Authority

Legal changes or transfers that occur automatically because of established laws, without the need for action by individuals.

Apparent Authority

The appearance or assumption of authority based on the actions or statements of the principal, leading others to believe someone has the authority to act on behalf of the principal.