A Positive Externality Occurs Whenever

question 88

Multiple Choice

A positive externality occurs whenever:

• A) an increase in the output of one firm lowers costs for other firms.
• B) a decrease in the output of one firm lowers costs for other firms.
• C) an increase in costs of one firm lowers costs for other firms.
• D) a decrease in one firm's hiring of labor lowers labor costs for other firms.

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Definitions:

Working Capital

The difference between a company's current assets and its current liabilities, representing the short-term liquidity and operational efficiency of the company.

Fixed Assets

Long-term tangible assets that a firm uses in its operations and that are not expected to be consumed or converted into cash within a year.

Receivables

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Modified Accelerated Cost Recovery System (MACRS)

A method of depreciation used for tax purposes in the United States that allows businesses to recover investments in certain property over a specified life through annual deductions.