If There Are Both External Benefits and External Costs Associated

question 48

Multiple Choice

If there are both external benefits and external costs associated with the production and consumption of a good, and the external benefits are less than the external costs,

• A)​More than the efficient amount is being produced
• B)​Less than the efficient amount is being produced
• C)​the efficient amount is being produced
• D)​We do not know whether the efficient amount, or more or less, is being produced.

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Definitions:

Statement of Cash Flows

A financial report that summarizes the amount of cash and cash equivalents entering and leaving a company.

Income Tax Expense

The amount of income tax a company is obligated to pay to the government, based on its taxable income.

Cash Basis

An accounting method where revenues and expenses are recorded when cash is received or paid, rather than when they are incurred.

Statement of Cash Flows

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.