If There Are External or Spillover Benefits Associated with Consumption

question 84

Multiple Choice

If there are external or spillover benefits associated with consumption and production of a product,it can be said that the:

• A) government should consider placing a special tax on producers.
• B) government should consider prohibiting the production of the commodity.
• C) supply curve for the product lies too far to the right to provide an efficient allocation of resources.
• D) demand curve understates the total benefit from the product and resources are underallocated to its production.

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Definitions:

Earnings per Share

A financial metric that indicates how much profit a company makes for each share of its stock, calculated as net income divided by the number of outstanding shares.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a dataset, often used in inventory valuation.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Current Liabilities

Current liabilities are financial obligations a company is expected to pay within one year.