In a Market with an External Cost,government Action

question 78

Multiple Choice

In a market with an external cost,government action

• A) cannot decrease the amount of the deadweight loss from the external cost.
• B) can sometimes help to achieve an efficient outcome.
• C) cannot alter firms' cost curves.
• D) Both answers A and C are correct.
• E) Both answers B and C are correct.

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Definitions:

Union Dues

Fees paid by workers to a union for membership and representation.

State Sales Tax

A tax imposed by a state on sales of goods and services, collected by the seller and passed on to the state government.

Sales Taxes Payable

A liability account that represents the amount of sales tax collected from customers by a business, which is owed to the government.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenses to the correct periods.