-Refer to Figure 15-5

question 122

Multiple Choice

-Refer to Figure 15-5. If, because of an externality, the economically efficient output is Q₂ and not the current equilibrium output of Q₁, what does D₂ represent?

• A) the demand curve reflecting external benefits
• B) the demand curve reflecting social benefits
• C) the demand curve reflecting private benefits
• D) the demand curve reflecting the sum of social and external benefits

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Definitions:

Projected ROEs

Estimated returns on equity, predicting future profitability based on company's equity investments.

Restricted Policy

A restricted policy typically involves limitations or controls set on certain actions or decisions within an organization, aiming to comply with regulations, reduce risk, or achieve specific goals.

Relaxed Policy

A financial strategy or policy that is less strict or rigid, often implying a more liberal approach to lending, investing, or managing assets.

Trade Credit

The arrangement between businesses to buy goods or services on account, paying the supplier at a later date.