Which of the Following Statements Is True

question 6

Multiple Choice

Which of the following statements is true?

• A)In the case of positive externalities,a private market will produce too little of the good compared with the socially efficient level of output.
• B)In the case of positive externalities,a private market will produce too much of the good compared with the socially efficient level of output.
• C)Negative externalities occur when benefits accrue to individuals not directly involved in the transaction.
• D)Positive externalities occur when costs are imposed on individuals not directly involved in the transaction.
• E)In the case of negative externalities,a private market will produce too little of the good compared with the socially efficient level of output.

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Definitions:

SEC

The Securities and Exchange Commission, a U.S. federal agency responsible for enforcing federal securities laws and regulating the securities industry.

Company

An legal entity formed by a group of individuals to engage in and operate a business—commercial or industrial—enterprise.

Restrictive Covenants

Restrictive covenants are clauses in contracts that impose restrictions on actions that parties to the contract can take, often used in employment agreements and real estate transactions to protect business interests.

Bond Rating

An assessment of the credit quality of a bond, generally given by a rating agency.