Which of the Following Statements Is TRUE

question 131

Multiple Choice

Which of the following statements is TRUE?
I. Overfishing results from fish being privately owned by profit-maximizing firms.
II. If a fisherman catches a lot of fish, he creates a negative externality because there are less fish to catch for everyone else.
III. There is no incentive for an individual to fish less simply to leave more fish for everyone else to catch.

• A) I, II, and III
• B) II only
• C) II and III only
• D) I only

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Definitions:

Accruals

Accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash transactions occur, reflecting the economic activity more accurately.

Employee Benefits

All forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment.

Insurance Contracts

Contracts under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specific uncertain future event adversely affects the policyholder.

Warranty Obligations

Liabilities recognized by a company to cover the costs of repairs or replacements for products sold within a specified warranty period.