Consider a Remote Village with a Limited,freely Available Water Supply

question 24

Multiple Choice

Consider a remote village with a limited,freely available water supply and no government intervention in the allocation of water.In this case,each individual has an incentive to use water until their

• A)private marginal benefit is zero.
• B)private marginal cost is zero.
• C)social marginal benefit is maximized.
• D)social marginal cost is minimized.
• E)private and social marginal costs are equal.

---

Definitions:

Standard Cost System

An accounting system that estimates the cost of products in advance, using standard rates for materials and labor.

Direct Labor-Hours

The hours worked by employees directly involved in manufacturing goods, which is used as a basis for assigning labor costs to products.

Fixed Manufacturing Overhead

The portion of total manufacturing overhead costs that remains constant regardless of the level of production or activity volume.

Raw Material

Fundamental substances utilized during the manufacturing process to create products.