Which of the Following Is True of Externalities

question 39

Multiple Choice

Which of the following is true of externalities?

• A) All externalities are negative in nature.
• B) They are only borne by individuals responsible for creating them.
• C) Technological innovation results in complete eradication of negative externalities.
• D) Externalities can be in the form of benefits reaped by individuals.

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Definitions:

Discount Period

The time interval between when a bill of exchange is issued and its payment date, during which the bill is sold at a discount from face value.

2/10, Net 30

A common credit term indicating that a buyer can take a 2% discount on the invoice price if payment is made within 10 days, otherwise, the full invoice amount is due in 30 days.

Accruals

Adjustments in accounting for income that has been generated but not yet documented, and for costs that have been accrued but not yet documented.

Working Capital Needs

The funds required to finance the day-to-day operations of a business, including managing its short-term assets and liabilities.