If Production of a Good Produces an External Benefit, in Order

question 107

Multiple Choice

If production of a good produces an external benefit, in order for the marginal social cost to equal the marginal social benefit

• A) the good should be taxed.
• B) permits should be required to purchase the good.
• C) the good could be subsidized.
• D) the government needs to take no action.

---

Definitions:

Cost of Goods SOLD

Expenses directly associated with the creation of goods a company sells, including costs for materials and labor.

Operating Expenses

Recurring expenses related to the central operations of a business, such as rent, utilities, and payroll, excluding costs of goods sold.

Earnings Per Share

A measure of a company's profitability, calculated as the net income divided by the number of outstanding shares of common stock.

Common Stockholders

Individuals or entities that own shares of common stock in a corporation, giving them rights to dividends and voting in shareholder meetings.