If There Are External Benefits Associated with the Consumption of a Good

question 42

Multiple Choice

If there are external benefits associated with the consumption of a good or service:

• A) The private demand curve will overestimate the true demand curve
• B) The private demand curve will underestimate the true demand curve
• C) Consumers will be willing to pay for all these benefits in private markets
• D) The market demand curve will be the vertical summation of the individual demand costs

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Definitions:

FUTA Tax

Federal Unemployment Tax Act tax, which is a payroll tax paid by employers to fund the unemployment benefits system.

Employee's Income

The total earnings, including wages, salaries, bonuses, and other compensation, received by an employee for their work.

Employer

An individual or organization that hires and pays people for their labor or services.

Form W-2

The tax form that an employer must send to an employee and the IRS at the end of the year. It reports an employee’s annual wages and the amount of taxes withheld from his or her paycheck.