When Resource Prices Reflect True Social Costs

question 2

Multiple Choice

When resource prices reflect true social costs

• A) external diseconomies must be present.
• B) profit-maximizing firms will tend to produce socially desirable amounts of output.
• C) firms will not use any air or water in their production processes.
• D) production will cease.
• E) firms realize no net benefits from continued production.

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Definitions:

Earnings per Share Growth

An increase in the amount of net income earned per share of stock over a specified period, indicating a company's profitability.

Goodwill Recognition

The accounting process of recording the value of intangible assets acquired through a business combination.

Pooling of Interest

An accounting method for mergers and acquisitions where the assets and liabilities of the combining companies are aggregated.

Synergy

The benefit that results when two or more agents work together to achieve something neither could have achieved on their own.