Figure: Market with External Cost Reference: Ref 10-2 (Figure

question 31

Multiple Choice

Figure: Market with External Cost Reference: Ref 10-2 (Figure: Market with External Cost) The figure displays a market with external costs. The efficient level of output of ________ units would eliminate the deadweight loss area of ________.

• A) Q1; ce
• B) Q0; ce
• C) Q0; gh
• D) Q1; de

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Definitions:

Direct Labor

The expenditure on the pay of staff members directly participating in the production of goods or delivery of services.

Production Department

A division within a manufacturing company responsible for the actual production of goods.

Prior Department

Refers to the earlier stage or department in a production process or organizational structure that precedes the current focus point.

Partially Processed Product

Items that have undergone some stages of the production process but are not yet completed.