A Shift from S₁ to S₂ Reflects the Change That $P _ { 1 }$

question 61

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.A negative externality exists that has not been corrected.Price and quantity will be

• A) \(P _ { 1 }\) and \(\mathrm { Q } _ { 1 }\) .
• B) \(P _ { 2 }\) and \(\mathrm { Q } _ { 2 }\) .
• C) \(\mathrm { P } _ { 3 }\) and \(\mathrm { Q } _ { 3 }\) .
• D) \(\mathrm { P } _ { 4 }\) and \(\mathrm { Q } _ { 4 }\) .

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Definitions:

Accounts Receivable

Funds that customers owe to a company for products or services that have been provided but not yet compensated for.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's accounts receivable that may not be collectible.

Mutual Agency

A principle in partnership where each partner is both an agent and a principal to the partnership, authorized to bind the partnership in contracts and agreements.

Partnership Business

A business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Agreement.