Since Air Pollution Creates a Negative Externality

question 64

Multiple Choice

Since air pollution creates a negative externality,

• A)social welfare will be enhanced when some, but not all air pollution is eliminated.
• B)social welfare is optimal when all air pollution is eliminated.
• C)governments should encourage private firms to consider only private costs.
• D)the free market result maximizes social welfare.

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Definitions:

Total Assets

The sum of all assets owned by a company, including both current and fixed assets, as represented on the balance sheet.

Dividends

Disbursements issued by a company to its shareholders, usually sourced from the organization's earnings.

Income Summary

A temporary account used to transfer the revenues and expenses for an accounting period to the Retained Earnings account.

Retained Earnings

The total earnings of a company so far, minus any dividends or distributions given out to shareholders.