A Subsidy

question 17

Multiple Choice

A subsidy

• A)raises marginal social benefit above marginal social cost.
• B)makes marginal social cost equal marginal social benefit.
• C)results in efficient production.
• D)raises marginal social cost above marginal social benefit.
• E)makes world prices higher than domestic prices.

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Definitions:

Direct Materials Cost

The cost of raw materials and components that are directly traceable to the production of goods.

Direct Labor Cost

The cost associated with the labor of employees directly involved in the production of goods or services.

Direct Labor-Hours

A measure of the time spent by workers directly creating a product, which is used to allocate labor costs properly.

Activity Cost Pools

Activity cost pools are groupings of individual costs, classified based on the activities that incur costs within an activity-based costing system to facilitate more accurate product costing.