Consider the Production of Some Industrial Good That Creates Air

question 143

Multiple Choice

Consider the production of some industrial good that creates air pollution. The table below gives the marginal social cost (MSC) , the marginal cost (MC) , and the marginal social benefit (MSB) for each level of output (Q) . The inefficient market quantity is _______ and the efficient quantity is _______ .

• A) 4; 6
• B) 3; 4
• C) 4; 3
• D) 6; 3

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Definitions:

Composite Units

A measure used in costing to represent a bundle or mix of goods or services treated as a single unit.

Break-Even Point

The financial state in which total costs equal total revenues, resulting in neither profit nor loss.

Variable Cost

Costs that vary directly with the level of production or volume of services provided.

Composite Units

A measurement used in accounting to collectively represent a group of similar items or transactions as a single entity.