Consider the Following Problems: Overcrowded Public Highways, Overfishing in the Ocean

question 68

Multiple Choice

Consider the following problems: overcrowded public highways, overfishing in the ocean, polluted air, and the near-extinction of the wild rhinoceros. What do these problems have in common?

• A)Private markets could easily solve them if governments left the markets alone.
• B)They would all go away if the government sponsored an intensive public-information campaign.
• C)They are all the result of a failure to establish clear property rights over something of value.
• D)They are all the result of a failure of corrective taxes.

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Definitions:

Notes Payable

A liability on a balance sheet representing promissory notes that a company must pay in the future.

Bad Debts Expense

The operating expense account that estimates the amount of credit sales that will probably not be collectible in a given accounting period when the Allowance method is used. For the direct write-off method, this account would be the actual amount written off.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that may not be collected.

Interest Income

Income earned from investments and lending activities, including accounts receivable.