If the Government Wanted to Ensure That the Market Reaches

question 48

Multiple Choice

If the government wanted to ensure that the market reaches the socially optimal equilibrium in the presence of a technology spillover, it should

• A)impose a corrective tax on any firm producing a technology spillover.
• B)offer tax credits to consumers who are adversely affected by the new technology.
• C)subsidize producers by an amount equal to the value of the technology spillover.
• D)provide research grants to those firms not currently engaging in research to increase competition in the industry.

---

Definitions:

Process Cost System

An accounting system used to track and assign production costs to units of output, particularly useful for homogeneous products.

Equivalent Units Of Production

A calculation used in cost accounting to apportion costs among completed units and units in process, based on their stage of completion.

Overapplied Overhead

A situation where the allocated overhead costs are more than the actual overhead costs incurred.

Weighted-Average Method

An inventory costing method that assigns an average cost to each unit of inventory, taking into account both the cost and the quantity of each item purchased.