The Production of a Good with Positive Externalities Will Increase

question 5

Multiple Choice

The production of a good with positive externalities will increase when:

• A)the government provides a subsidy for the good.
• B)the marginal internal cost of the good is higher than the marginal total cost.
• C)there is a price ceiling of zero in the market.
• D)the producer sells the good for a very high price-marginal cost markup.
• E)there are a large number of buyers and sellers in the market.

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Definitions:

Direct Labor

The cost of wages for employees directly involved in the production of goods or services.

Process Costing System

A costing method used in industries where production is continuous and units are indistinguishable from each other, allocating costs to units of product based on the process they go through.

Work In Process Accounts

Accounts used to track the costs of unfinished goods in production processes at any point in time.

Process Cost System

An accounting method used to allocate costs to products that are produced in continuous processes or batches.