-In the Above Figure, If a Firm Is Cleaning Up

question 193

Multiple Choice

-In the above figure, if a firm is cleaning up units of pollution, it is an

• A)efficient solution, because marginal social benefits are greater than marginal social costs.
• B)efficient solution, because marginal social benefits are equal to marginal social costs.
• C)inefficient solution, because marginal social benefits are greater than marginal social costs.
• D)inefficient solution, because marginal social costs are greater than marginal social benefits.

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Definitions:

Variable Overhead

Costs that vary in direct proportion to changes in a firm's level of activity, such as utilities or raw materials.

Spending Variance

The difference between the actual amount spent in producing a certain number of units and the budgeted or standard amount expected to be spent.

Variable Overhead

The portion of overhead costs that varies directly with production volume, such as raw materials and labor hours.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a cost or expense over a particular period.