If a Good Has Zero External Costs, Then

question 30

Multiple Choice

If a good has zero external costs, then

• A) marginal social cost is less than marginal private cost.
• B) marginal social cost equals marginal private cost.
• C) marginal social cost is greater than marginal private cost.
• D) We need more information to determine the relationship between private and social costs.

Identify and calculate differential, opportunity, and sunk costs in decision-making scenarios.

Estimate incremental costs associated with a slight increase in production.

Compute the expected contribution margin given a specific activity level.

Understand the cost formula for both variable and fixed expenses.

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Definitions:

Predetermined Hours

Set hours or a schedule established in advance, typically relating to work or tasks that need to be completed within those times.

Compressed Workweek

An alternative work schedule that allows employees to work fewer days but longer hours per day, covering a standard work week's total hours.

10-Hr Days

A work schedule that consists of a ten-hour period of labor or professional activity, typically applied to a four-day workweek.

Extra Day Off

An additional day where employees are not required to work, often provided as a benefit or reward.