The Cost of Running an Electrical Utility Includes Costs for Fuel

question 133

Multiple Choice

The cost of running an electrical utility includes costs for fuel, labor, and capital. In addition, there are sometimes costs associated with pollution from the utility, such an increased health care costs for people living near the utility. To an economist, the costs associated with the pollution resulting from additional electricity are:

• A) marginal private costs.
• B) marginal social costs.
• C) the difference between marginal social costs and marginal private costs.
• D) the sum of marginal social costs and marginal private costs.

Determine the best product mix to maximize the use of a constrained resource.

Evaluate the financial advantage/disadvantage of further processing products.

Make decisions on resource allocation based on contribution margin and constrained resources.

Understand the principles of cost allocation to products in joint production processes.

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Definitions:

Trade Promotion

Marketing activities aimed at increasing demand for products by offering incentives to wholesalers, retailers, or customers, typically in a limited period.

Marketing Intermediaries

Organizations that assist in moving goods and services from producers to consumers.

Pulling Strategy

A marketing strategy that aims to create demand for a product or brand that encourages consumers to seek it out, often through promotions and advertising.

Pushing Strategy

A marketing strategy that involves taking a product directly to the customer via distribution channels to ensure visibility and accessibility.