A Shift from S₁ to S₂ Reflects the Change That $\mathrm { Q } _ { 1 }$

question 134

Multiple Choice

A shift from S₁ to S₂ reflects the change that happens when a negative externality is taken into account.A shift from D₁ to D₂ reflects the change that happens when a positive externality is taken into account.
-Refer to the above figures.An external benefit exists.This will lead to a(n)

• A)underproduction equal to \(\mathrm { Q } _ { 1 }\) minus \(\mathrm { Q } _ { 2 }\) .
• B)overproduction equal to \(\mathrm { Q } _ { 4 }\) minus \(\mathrm { Q } _ { 3 }\) .
• C)underproduction equal to \(\mathrm { Q } _ { 4 }\) minus \(\mathrm { Q } _ { 3 }\) .
• D)overproduction equal to \(\mathrm { Q } _ { 1 }\) minus \(\mathrm { Q } _ { 2 }\) .

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Definitions:

Financial Statements

Reports that summarize the financial activities and condition of a business, including balance sheet, income statement, and cash flow statement.

Stockholders' Equity

The portion of a company's assets that belongs to the shareholders, represented by the company's common stock, preferred stock, and retained earnings.

Accrued Wages

Wages that have been earned by employees but have not yet been paid by the employer.

Accrued Revenues

Income that has been earned but not yet received; recorded to recognize revenue prior to cash receipt.