Negative Externalities Are Likely to Cause

question 88

Multiple Choice

Negative externalities are likely to cause:

• A)underproduction of goods.
• B)overallocation of resources.
• C)an increase in social welfare.
• D)demand-side market failures.

---

Definitions:

Machine-Hours

An operating measure that quantifies the amount of time production equipment is utilized in the manufacture of goods.

Predetermined Overhead Rate

A rate calculated before a production period based on estimated overhead costs and estimated activity, used to allocate overhead costs to products.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual products or projects, based on expected conditions.

Machine-Hours

A measure of manufacturing time that indicates the amount of time a machine is in use.