If an Economic Activity Results in External Costs as Well

question 209

Multiple Choice

If an economic activity results in external costs as well as private costs, economic theory would suggest that this activity should:

• A) be taxed.
• B) be prohibited.
• C) be subsidized.
• D) not be allowed.

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Definitions:

Hostile Takeover

An attempt by one company to acquire another without the agreement of the target company's management.

Market Value

The current price at which an asset or service can be bought or sold in the open market.

Stock

Equity units in a corporation, signifying a stake in the firm's profits and assets.

Articles of Dissolution

Documents filed with a governmental body to formally conclude the legal existence of a corporation or partnership.