The Distribution of Surplus Received from a Subsidy Offered in a Market

question 121

Multiple Choice

The distribution of surplus received from a subsidy offered in a market where a positive externality is present depends on:

• A)where the government gets the money to pay for the subsidy.
• B)how the subsidy is distributed among those affected by the externality.
• C)if those who are affected receive their true value of the externality.
• D)None of these statements is true.

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Definitions:

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made on a periodic basis rather than continuously.

Perpetual Inventory System

An accounting method that records inventory purchases and sales in real-time, providing a continuous account of inventory balances.

Cost Of Goods Sold

The direct costs attributed to the production of the goods sold by a company, including materials and labor.

ASPE

Accounting Standards for Private Enterprises, a set of accounting standards for private companies in Canada.