If Those Who Consumed Common Resources Were Subject to a Tax

question 97

Multiple Choice

If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created:

• A) an efficient level would be reached.
• B) total surplus would be maximized for the whole society.
• C) individuals would consume less.
• D) All of these statements are true.

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Definitions:

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, but not control them. This is often evidenced by owning a substantial minority of voting stock.

Book Value

Book Value is the value of an asset as it appears on the balance sheet, calculated as the cost of an asset minus any depreciation or amortization.

Significant Influence

Refers to the capacity of an investor to affect the financial and operating policies of an investee through ownership, without having complete control.

Common Stock

A type of equity ownership in a corporation, representing a claim on a portion of its profits and assets.