For a Government Subsidy on a Good with an External

question 292

Multiple Choice

For a government subsidy on a good with an external benefit to result in the efficient amount of output being produced,what must be done?

• A) The size of marginal external benefit must be accurately determined.
• B) The government must produce the product.
• C) Private production and private consumption must both be directly subsidized.
• D) The quantity demanded must be decreased to the efficient amount.
• E) Private production without the subsidy must be prohibited.

---

Definitions:

Stockholders' Equity

The amount of capital given to a company by its shareholders plus its retained earnings.

Intangible Assets

Non-physical assets such as patents, trademarks, and copyrights that have value to a business.

Classified Balance Sheet

A balance sheet that organizes assets and liabilities into subcategories like current, long-term, property, plant, and equipment, to provide more detailed information.

Current Ratio

It's a financial ratio that calculates whether a corporation can cover its obligations that need to be paid within one year, by dividing the current assets by the current liabilities.