When There Are No Externalities

question 19

Multiple Choice

When there are no externalities,

• A) the market equilibrium occurs at the point where the marginal social benefit is equal to the marginal social cost.
• B) society is not as well off as it could be.
• C) the marginal social cost is different from the marginal private cost.
• D) other people must bear part of the cost.
• E) there is no market equilibrium.

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Definitions:

Capacity

The maximum amount of work that an organization is capable of completing in a given period of time.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Unsold Units

Inventory items that have been produced or acquired but have not yet been sold to customers.

Selling Price

The price at which a product or service is sold to customers, determined by factors like cost, demand, competition, and market conditions.