A Local Cafe That Allowed Patrons to Smoke Was Forced

question 126

Multiple Choice

A local cafe that allowed patrons to smoke was forced to stop serving customers because it did not comply with local clean air standards.This decision provides an example of

• A)a direct regulation of an externality.
• B)corrective taxes.
• C)a Coase theorem solution to an externality.
• D)the misuse of a subsidy.

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Definitions:

Investments

Assets purchased with the goal of generating income or appreciating in value over time.

Accounting Changes

Accounting Changes are modifications in the accounting methods, estimates, or reporting entity that affect the financial statements of a company.

Net Income

The total earnings of a company after subtracting all expenses from revenues, also known as net earnings or net profit.