To Correct for the Underproduction of Products with Positive Externalities

question 334

Multiple Choice

To correct for the underproduction of products with positive externalities, the government must

• A) provide the incentives for the private sector to produce and consume the good.
• B) provide tougher regulations on the industry.
• C) increase taxes on the industry.
• D) fine the industry.

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Definitions:

Revaluation

An adjustment to the carrying value of an asset or a currency to reflect its current fair market value.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide financial reporting globally.

Double Declining-Balance Method

The double declining-balance method is an accelerated depreciation technique that doubles the normal depreciation rate, resulting in higher depreciation expenses in the early years of an asset's life.

Depreciation Expense

The allocated amount of an asset's cost over its useful life, reflecting the consumption or wear and tear of the asset.