Which of the Following Are True

question 97

Multiple Choice

Which of the following are true?

• A)​Negative externalities are real costs, but, unlike the other resources a firm uses in production, no one owns the air, so a firm does not have to pay for its use.
• B)​In the case of external costs, firms tend to produce too much from society's standpoint, causing an efficiency loss due to an overallocation of scarce resources to the production of the good.
• C)​If government could impose a pollution tax equal to the exact size of the external costs imposed by a firm, then the firm would produce at the socially desired level of output.
• D)​All of the above are true.

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Definitions:

Yields to Maturity

The total return anticipated on a bond if it is held until it matures, considering all interest payments and the principal repayment.

Yield to Maturity

The total return anticipated on a bond if the bond is held until it matures, considering both the interest payments received and any gain or loss if the bond is purchased at a discount or premium.

Coupon

A detachable portion of a bond that is given up in return for the periodic interest payments.

Interest Rates

The cost of borrowing money or the return on invested funds, typically expressed as a percentage.