Which of the Following Correctly Describes the Deadweight Loss Associated

question 171

Multiple Choice

Which of the following correctly describes the deadweight loss associated with any positive externality?

• A) the cost borne by third parties if the externality is not internalized
• B) the benefit to third parties of keeping the externality in place
• C) the cost to consumers of government actions to internalize the externality
• D) the cost to producers of government actions to internalize the externality
• E) the combined cost,to consumers and producers,of government actions to internalize the externality

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Definitions:

Capital Investment Analysis

The process of evaluating the potential returns of an investment in fixed assets or long-term projects versus its costs.

Risk-Return Trade-Off

The principle that potential return rises with an increase in risk.

Leveraged Buyout Analysis

A financial transaction analysis in which a company is purchased using a significant amount of borrowed money to meet the cost of acquisition.

Divestiture Planning

The process of selling off a business unit, division, or assets of a company as a strategic move to focus on core operations or free up resources.