A Consequence of a Negative Externality Is That Social Costs

question 60

Multiple Choice

A consequence of a negative externality is that social costs __________ private costs,and the efficient level of output __________.

• A) equal; does not require any type of government intervention
• B) are less than; requires the government to create a subsidy
• C) are greater than; requires the government to impose a tax
• D) are greater than; requires the government to create a subsidy
• E) are less than; requires the government to impose a tax

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Definitions:

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock, bond, commodity, or other asset at a specified price within a specific time period.

Expiration

The end of the life of a financial instrument or contract, after which it ceases to be valid.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy a stock, bond, commodity, or other asset at a specified price within a specific time period.

Expiration

The date on which a derivative contract such as an option or futures contract becomes void and the right to exercise it no longer exists.