Positive Externalities Arise When

question 320

Multiple Choice

Positive externalities arise when

• A) an unprofitable firm is shut down.
• B) a profitable firm is regulated.
• C) tax rates are reduced.
• D) production of a good generates benefits that spill over to third parties.

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Definitions:

Debt-to-Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Equity Buffer

Additional equity maintained by a financial institution above the regulatory minimum to absorb potential losses.

Ratios

Ratios are financial metrics derived from a company's financial statements, used to evaluate aspects such as its profitability, liquidity, and solvency.

Ratio Computation

The process of calculating financial ratios, which are mathematical tools used to analyze and compare financial statements.