-Producing Leather Creates External Costs in the Form of Water

question 191

Multiple Choice

-Producing leather creates external costs in the form of water pollution.The figure above illustrates the market for leather.In the absence of any government regulation,how many tons of leather will be produced?

• A) 0 tons
• B) 200 tons
• C) 300 tons
• D) more than 300 tons
• E) None of the above answers is correct.

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Definitions:

Fair Value Method

An accounting approach that measures and reports assets and liabilities on the basis of their estimated or actual fair market price.

Carrying Value

The book value of assets and liabilities on a company's balance sheet, excluding market value fluctuations.

Common Stock

Equity securities representing ownership in a corporation, with voting rights and potential dividends.

Par

The face value of a bond or stock, which is the amount the issuer agrees to pay at maturity in the case of a bond, or the value assigned to a share of stock at the time of issue.