Suppose the Production of a Good Results in Negative Externalities

question 158

Multiple Choice

Suppose the production of a good results in negative externalities. If society produces the output consistent with the intersection of the demand curve and the marginal private cost curve, then

• A)the socially optimal level of output will be produced.
• B)society will incur a net social cost.
• C)society will want more output produced, and producers will be willing to satisfy this desire at a price that society deems acceptable.
• D)all of the above
• E)There is not enough information to answer this question.

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Definitions:

Factory Labor Costs

The total expense incurred by a company for the labor used in the production of goods, including wages, benefits, and taxes.

Factory Labor Expense

Costs associated with the wages and benefits of factory workers directly involved in producing goods.

Process Costing System

A costing method used in industries where production is continuous, assigning costs to units of product based on the process they go through.

Direct Materials

The raw materials that are used directly in the manufacturing of a product and can be easily traced to it.