If a Good Incurs a Negative Externality, Then the Socially

question 56

Multiple Choice

If a good incurs a negative externality, then the socially desirable output level can be reached by

• A)increasing the supply of the good.
• B)decreasing the supply of the good.
• C)increasing the demand for the good.
• D)subsidizing the consumption of the good.
• E)allowing the government to produce the good.

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Definitions:

Sole Proprietorship

Sole Proprietorship is a business structure owned and operated by one individual, where there is no legal distinction between the owner and the business.

Legal Entities

Entities recognized by law that have rights and responsibilities, such as corporations, partnerships, and sole proprietorships.

Accounting Entities

Organizations, businesses, or units for which separate financial statements are prepared, distinct from any other economic activities.

Generally Accepted Accounting Principles

A standard framework of guidelines for financial accounting that includes the details, complexities, and legalities of business and corporate accounting.