Identify Two Activities That Generate Positive Externalities and Two Activities

question 169

Essay

Identify two activities that generate positive externalities and two activities that generate negative externalities. Be sure to explain why each activity you identified generates the type of externality you stated.

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Definitions:

Period Costs

Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued.

Inventory Accounts

Accounts used to track the cost of inventory that has been purchased but not yet sold to customers.

Manufacturing Company

A business that produces finished goods from raw materials by using various forms of labor, equipment, and processes.

Merchandising Company

A business that purchases finished goods for resale, making a profit on the difference between the buying and selling prices.