If the Production of a Particular Good Involves Significant External

question 161

Multiple Choice

If the production of a particular good involves significant external benefits, to force the externality to be internalized the government might:

• A)​impose a tax on production of the good in order to increase production.
• B)​impose a tax on production of the good in order to decrease production.
• C)​offer a subsidy for production of the good in order to increase production.
• D)​offer a subsidy for production of the good in order to decrease production.

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Definitions:

Receivables Turnover

This is a financial ratio that measures how efficiently a company collects debts from its customers, indicating how many times receivables are converted into cash in a period.

Interval Measure

The interval measure is a liquidity metric that estimates how long a company can operate using its current liquid assets without needing additional financing.

Quick Ratio

A measure of a company's ability to meet its short-term obligations with its most liquid assets. It is calculated as (current assets - inventories) / current liabilities.

Inventory

The goods and materials a business holds for the ultimate goal of resale or processing.