When There Is a Positive Externality

question 40

Multiple Choice

When there is a positive externality,

• A)the marginal private benefit received by consumers is greater than the external benefit.
• B)the marginal social benefit received by consumers is greater than the marginal private benefit.
• C)the marginal private benefit received by consumers is greater than the marginal private cost.
• D)the marginal private benefit received by consumers is greater than the marginal social benefit.

Comprehend the steps in calculating a predetermined factory overhead rate and its application to production departments.

Acquire the ability to journalize transactions related to production costs, including the transfer of costs, the application of conversion costs, and the analysis of overhead application variances.

Understand how to compute cost per equivalent unit for transferred-in costs as well as for conversion and material costs using the weighted average method.

Learn about the complexity of costing in a process that uses different materials for different products but shared labor and overhead costs.

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Definitions:

Valuation

The process of determining the current worth of an asset or a company.

Production Cost

The total expenses incurred in the process of creating a product or service, including raw materials, labor, and overhead costs.

High Supplier Power

A market condition where suppliers have significant influence over the market price and terms of products because of the lack of competition or alternatives.

Threat from Substitutes

The risk that alternative products or services may satisfy the same customer needs, potentially reducing demand for the current product.