An Externality Exists Whenever

question 370

Multiple Choice

An externality exists whenever

• A)the economy cannot benefit from government intervention.
• B)markets are not able to reach equilibrium.
• C)a firm sells its product in a foreign market.
• D)Bobbi engages in an activity that influences the well-being of Rosa and yet Bobbi neither pays nor receives payment for that influence.

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Definitions:

Strategic Operating Decisions

Decisions that affect the overall direction and operations of a company, focusing on long-term goals and objectives.

Line-By-Line Method

A consolidation technique where the financial statements of the parent and its subsidiaries are combined by adding together like items of assets, liabilities, equity, income, and expenses.

Cash

Money in the form of bills or coins; represents the most liquid form of assets available.

Building

A structure with walls and a roof, such as a house or factory, designed for various uses.