Table 10-1 the Following Table Shows the Private Value, Private Cost, and Cost

question 148

Multiple Choice

Table 10-1
The following table shows the private value, private cost, and external cost for various quantities of output in a market.
-Refer to Table 10-1. Which of the following statements is correct?

• A)If the external cost per unit of output were $0 instead of $2, then the socially efficient quantity of output would be 4 units.
• B)A tax of $4 per unit would enable this market to move from the equilibrium quantity of output to the socially optimal level of output.
• C)Taking the external cost into account, total surplus declines when the 3rd unit of output is produced and consumed.
• D)The market for flu shots is a market to which the concepts in this table apply very well.

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Definitions:

EOQ Model

Economic Order Quantity model determines the optimal order quantity that minimizes the total inventory costs, including ordering and holding costs.

Order Cost

Expenses associated with placing and processing orders in a supply chain, including costs related to purchasing, ordering, shipping, and receiving goods.

Economic Order Quantity

A formula used to determine the most efficient order size that minimizes the total cost of inventory management, including ordering and holding costs.

Production Order Quantity Model

An inventory management method used to determine the optimal order quantity that minimizes the total holding and ordering costs.