Markets Tend to Be Inefficient When It Comes to Public

question 189

Multiple Choice

Markets tend to be inefficient when it comes to public goods because:

• A) the government tends to overproduce the good.
• B) free riders lead to an underproduction of the good.
• C) the rival nature of the good makes it hard to collect payment from consumers.
• D) consumers tend to value these goods less than private goods.

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Definitions:

Cost Object

Any item for which a separate measurement of costs is desired, such as a product, service, project, or department.

Just-in-Time Manufacturing

A production methodology aimed at reducing flow times within production systems as well as response times from suppliers and to customers, by receiving goods only as they are needed in the production process.

Inventory

A complete list of items such as property, goods in stock, or the contents of a building.

Product Costs

Costs that are directly associated with the production of goods, including direct materials, direct labor, and manufacturing overhead.