To Internalize a Negative Externality

question 82

Multiple Choice

To internalize a negative externality:

• A)​a producer's costs could be reduced by an amount equal to the external cost resulting from the production of a good.
• B)​a producer's costs could be increased by an amount equal to the external cost resulting from the production of a good.
• C)​a producer could receive a subsidy equal to the external cost resulting from the production of a good.
• D)​None of the above are correct.

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Definitions:

Business Entity Assumption

An accounting principle that treats a business as a separate legal entity from its owners, requiring separate accounting records.

Personal Financial Information

Data related to an individual's finances, including income, debt, investments, and credit history.

Sole Stockholder

An individual or entity that is the only owner of all the shares of a company.

External Users

Individuals or entities outside of a company who are interested in its financial information, including investors, creditors, and regulatory agencies.