Which of the Following Would Some Economists Be Likely to Perceive

question 76

Multiple Choice

Which of the following would some economists be likely to perceive as the most appropriate public policy response to a positive externality created by the development of a highly innovative new technology?

• A) not taking into account the negative externality associated with social benefit
• B) not taking into account the positive externality associated with social benefit
• C) have reasonable rates of return not based on a notion of unearned social benefits
• D) develop ways to provide a greater share of the social benefits to the innovator

---

Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products based on a certain activity.

Machine-Hours

A measure of production output or activity, where one machine-hour equals one hour of operation of a machine.

Assembly Department

An area in a manufacturing plant where parts are put together to form the end products.

Overhead Rate

A calculated rate used to allocate overhead costs to products or services, usually determined by dividing total overhead costs by an allocation base.