Suppose That Recycling Rubber for Sneakers Creates an External Benefit

question 135

Multiple Choice

Suppose that recycling rubber for sneakers creates an external benefit of $2.00 per tonne of rubber. There are no external costs. The efficient amount of rubber will be recycled when the government creates a

• A) subsidy of $2.00 per tonne of rubber.
• B) tax of more than $2.00 per tonne of rubber.
• C) tax of $2.00 per tonne of rubber.
• D) subsidy of more than $2.00 per tonne of rubber.

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Definitions:

Indirect Materials

Materials used in the production process but not directly traceable to a specific product.

Work In Process

An inventory category that refers to partially completed goods that are still in production.

FIFO Method

"First In, First Out" method, an inventory costing technique that assumes the first items added to inventory are the first ones sold.

Beginning Inventory

The value of all the inventory held by a business at the start of an accounting period.