If a Good That Generates Negative Externalities Were Priced to Take

question 60

Multiple Choice

If a good that generates negative externalities were priced to take these negative externalities into account, then its

• A) price would decrease and its quantity would increase.
• B) quantity would increase, but its price would remain constant.
• C) price would increase and its quantity would decrease.
• D) price would increase, but its quantity would remain constant.

---

Definitions:

Discount Period

The time frame between the date of a bill of exchange or a deferred payment and its maturity date, when it becomes payable at a reduced rate.

Economic Order Quantity

A formula used in inventory management for determining the optimal order size that minimizes the total costs of holding and ordering inventory.

Inventory Management

The process of ordering, storing, and using a company's inventory, including raw materials, components, and finished products.

Inventory Levels

The quantity of goods and materials on hand at a particular time within a business, reflecting how well stock is being managed in relation to sales or production demand.