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NEW QUESTION: 1

--

A. Option A
B. Option D
C. Option B
D. Option C
Answer: C

NEW QUESTION: 2
Clay Industries, a large industrial firm, is in the process of developing a coal refining system which greatly increases the efficiency of coal as an energy source. However, the new system has been criticized as leading to a tremendous increase in emissions of CFTA, a dangerous carbon-based pollutant believed to be linked to thyroid cancer. While the firm is concerned about the possible risk to the public posed by the new system, the management of Clay Industries decides that the sales potential for the product outweighs both the risk to society and the liability exposure of the firm. Which of the following choices best describes this situation faced by Clay Industries?
A. Cannibalization problem
B. Diminishing returns problem
C. Negative externality
D. Principal/agent problem
E. Positive externality
F. Opportunity cost problem
Answer: C
Explanation:
Explanation/Reference:
Explanation:
In this situation, a negative externality exists for Clay Industries and the development of the new coal refining system. A negative externality is some detrimental effect which is to result on stakeholders from the acceptance of a project. While often difficult to quantify, externalities are an important consideration in the accept/reject decision in capital projects. Externalities can be both positive and negative.

NEW QUESTION: 3

A. Option D
B. Option A
C. Option B
D. Option C
Answer: A