When Production of a Good Creates an External Benefit

question 109

Multiple Choice

When production of a good creates an external benefit

• A) there is a negative externality.
• B) too much of the good is being produced.
• C) there is a positive externality.
• D) it results in the tragedy of the commons.
• E) a club good is being produced.

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Definitions:

Projected Benefit Obligation

An estimation of the present value of a retirement plan's liabilities owed to employees, based on projected salary increases.

Defined Benefit Pension Plan

A pension plan where an employer promises a specific payout upon retirement, based on factors like salary history and employment duration.

Pension Expense

The cost recognized by an employer for providing retirement benefits to employees over the current accounting period.

Expected Return

The predicted average of the probabilities of various returns an investment can generate, reflecting the anticipated earnings or loss.