If the Marginal Private Cost of Producing One Kilowatt of Power

question 4

Multiple Choice

If the marginal private cost of producing one kilowatt of power in South Australia is ten cents and the marginal social cost of each kilowatt is fourteen cents, then the marginal external cost equals ________ per kilowatt.

• A) ten cents
• B) nineteen cents
• C) fourteen cents
• D) four cents
• E) zero cents

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Definitions:

Consolidated Financial Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as one single economic entity.

Subsidiaries

Companies that are controlled by another company, often referred to as the parent company, through ownership of over 50% of the subsidiary's voting stock.

Goodwill Impairment

A decrease in the value of goodwill on a company's balance sheet, indicating that the expected future cash flows from an acquisition are lower than initially estimated.

Straight-Line Method

A method of calculating the depreciation of an asset, which spreads the cost evenly over its useful life.