Suppose That Flower Gardens Create a Positive Externality Equal to $1

question 95

Multiple Choice

Suppose that flower gardens create a positive externality equal to $1 per plant.Further suppose that the local government offers a $1 per-plant subsidy to growers.What is the relationship between the equilibrium quantity and the socially optimal quantity of plants grown?

• A)The equilibrium quantity is less than the socially optimal quantity.
• B)The equilibrium quantity is greater than the socially optimal quantity.
• C)They are equal.
• D)There is not enough information to answer the question.

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Definitions:

Camera Equipment

Hardware used in capturing images, including cameras, lenses, tripods, and lighting setups.

Loss On Sale

Loss on Sale occurs when the selling price of an asset is less than its carrying amount on the balance sheet, representing a financial loss for the company.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been allocated to depreciation expense over the asset's useful life, reducing its book value.

Group Depreciation

A method of depreciating multiple assets collectively that are similar in nature and have approximately the same expected useful lives.