If There Are External Benefits or Positive Externalities Associated with Consumption

question 56

Multiple Choice

If there are external benefits or positive externalities 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 under-allocated to its production.

Understand the requirements for consumer harm under Section 5 of the FTC Act and how they impact FTC enforcement actions.

Differentiate between advisory opinions, consent orders, and cease-and-desist orders in the context of FTC regulatory actions.

Explain the processes and criteria the FTC uses to determine whether an advertisement is deceptive.

Understand the legal defenses and strategies available to entities facing deceptive advertising proceedings by the FTC.

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Definitions:

Required Reserves

The minimum amount of deposits that a bank must hold in reserve and not lend out, as mandated by central banking regulations.

Excess Reserves

The amount of reserves that banks hold beyond the required minimum to meet potential withdrawals by customers.

Liquid Asset

Assets that can be quickly and easily converted into cash without significant loss in value.

Store Of Value

An asset that can be saved, retrieved, and exchanged at a later time, and is predictably useful in the future to purchase goods and services.