External Costs Are Modeled by Creating a New Social Cost

question 8

Multiple Choice

External costs are modeled by creating a new social cost curve that is

• A)lower than the original supply curve.
• B)higher than the original supply curve.
• C)lower than the original demand curve.
• D)higher than the original demand curve.

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Definitions:

Proprietary Fund Types

Types of funds used by governmental entities to account for activities similar to those found in the private sector, where the intent is to recover costs through user charges.

Internal Service Funds

Funds used by a government entity to account for the services provided by one department to other departments on a cost-reimbursement basis.

Enterprise Funds

Governmental accounting funds used to account for operations financed and operated in a manner similar to private business enterprises, where the intent is that the costs are financed primarily through user charges.

Non-Exchange Transactions

Transactions where an entity receives value without directly giving equivalent value in exchange, often seen in grants, donations, and government assistance.