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The Rand Corporation Estimates That the External Costs Imposed by Alcohol

question 178

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The Rand Corporation estimates that the external costs imposed by alcohol consumption (for example, deaths caused by drunk drivers) to be 48 cents per ounce consumed.Taxes on alcohol amount to 23 cents per ounce consumed.This information suggests: (i) alcohol is overconsumed; (ii) alcohol taxes should be raised.Which of these statements is correct?


Definitions:

Unit Product Cost

The total cost (direct materials, direct labor, and manufacturing overhead) divided by the number of units produced.

Machine-Hours

Machine-hours represent a measure of production time, indicating the total hours a machine is operated in the manufacturing process of goods.

Variable Manufacturing Overhead

Costs that vary with the level of production output and are related to manufacturing the product but not directly traceable to specific units of product.

Job J

Likely a specific reference to a job or project within a company, requiring a definition based on its context.

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