When Will Firms Produce an Output Level That Is Above

question 14

Multiple Choice

When will firms produce an output level that is above the socially efficient level?

• A)There are external costs of production equal to marginal benefits.
• B)There are internal costs of production and firms do not have to account for them.
• C)There are external costs of production and firms do not have to account for them.
• D)There are external costs of production and firms have account for them.

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Definitions:

Net Profit Margin Percentage

A financial metric that shows the percentage of revenue remaining as net income after all expenses, taxes, and costs have been deducted.

Return on Total Assets

measures a company's efficiency in using its assets to generate profit, calculated by dividing net income by total assets.

Total Assets

The sum of all current and non-current assets owned by a company, including cash, inventory, property, and equipment.

Gross Margin Percentage

A financial metric that represents the gross margin as a percentage of total sales revenue, indicating the efficiency of a company in producing and selling goods.