Requiring Deposits on Soft Drink Containers Is an Example of Using

question 32

Multiple Choice

Requiring deposits on soft drink containers is an example of using the price system to eliminate an external diseconomy because

• A) consumers prefer throwaway cans.
• B) it shifts pollution costs from individuals to society.
• C) it makes the drinker pay for the disposal costs of the can.
• D) the deposit allows the financing of trash baskets.
• E) the private costs exceed the social costs.

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Definitions:

Warrants

Financial derivatives that give the right, but not the obligation, to buy or sell a security at a specific price before a certain date.

Contracts

Legally binding agreements between two or more parties that outline terms and conditions for specified activities or transactions.

Fixed Price

A set cost that does not change over time, regardless of variations in market conditions or demand.

Preferred Stock

A category of corporate ownership that has precedence over common stock in terms of asset and earnings claims, typically featuring fixed dividend payments.