A Positive Externality ________

question 49

Multiple Choice

A positive externality ________.

• A) gives rise to external benefits
• B) leads to increasing returns to scale
• C) imposes an additional cost on society
• D) leads to a higher economic profit

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Definitions:

Book Value

The net value of a company's assets found on its balance sheet, calculated as total assets minus intangible assets (patents, copyrights) and liabilities.

Prepaid Insurance

Prepaid insurance refers to insurance premiums that have been paid in advance and are recorded as a current asset on the company's balance sheet until the period the insurance coverage relates to occurs.

Adjusting Entry

An adjusting entry is made in the accounting records at the end of a period to allocate income and expenditures to the appropriate period.

Insurance Expense

The cost incurred by a business or individual for purchasing insurance coverage.