Pollution and Other Negative Externalities Arise Because

question 157

Multiple Choice

Pollution and other negative externalities arise because

• A)there are no enforceable property rights to open-access resources
• B)legislators cannot agree on what to do about them
• C)they are the price consumers are willing to pay for production of goods and services
• D)private property rights to pollute are controlled by businesses
• E)science cannot decide how to control them

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Definitions:

Deferred Inventories

Inventory costs that are not expensed in the period they are incurred but are deferred to a future period.

Absorption Costing

This accounting practice involves adding all costs associated with production, including direct materials, labor, and both kinds of overhead expenses (variable and fixed), into the cost calculation of a product.

Unit Product Cost

The total cost (fixed and variable) associated with making one unit of product.

Fixed Manufacturing Overhead

Costs associated with the production process that do not vary with the level of output, such as salaries of managers or rent of the factory building.