A Market That Generates a Negative Externality That Has Not

question 43

True/False

A market that generates a negative externality that has not been internalised generates an equilibrium quantity that is less than the optimal quantity.

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Definitions:

Financial Statement

A documented summary of financial transactions and standing for a company, person, or alternative entity.

Normal Balance

The usual balance side (debit or credit) on which an account increases.

Account Category

A classification within the financial statements that helps in organizing accounts, such as assets, liabilities, equity, revenues, and expenses.

Controlling Account

An account in the general ledger that summarizes the total amounts recorded in all subsidiary ledger accounts.