To Correct for the Underproduction of Products with Positive Externalities

question 334

Multiple Choice

To correct for the underproduction of products with positive externalities, the government must

• A) provide the incentives for the private sector to produce and consume the good.
• B) provide tougher regulations on the industry.
• C) increase taxes on the industry.
• D) fine the industry.

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Definitions:

Direct Method

A method of preparing the cash flow statement where major classes of gross cash receipts and payments are disclosed.

Least Accurate

Describes the closest to being incorrect or the measurement or statement that has the highest degree of inaccuracy.

Reciprocal Services Method

A method of allocating support department costs to production departments that considers all inter-support-department services.

Sequential Method

A process or analytical approach where steps are followed in a specific, sequential order to achieve a desired result or solution.