Which of the Following Is an Example of a Negative

question 80

Multiple Choice

Which of the following is an example of a negative externality?

• A)high prices for necessities such as drinking water in the aftermath of a natural disaster
• B)the risks to nonsmokers from second-hand smoke
• C)the increased risk of a traffic accident to an individual who uses a cell phone while driving
• D)unemployment in the steel industry caused by low prices of imported (external) steel

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Definitions:

Direct Labor Hours

The total hours worked by employees directly involved in the production process.

Predetermined Factory Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to individual units of production based on a specific activity base.

Estimated Activity Base

A projection or forecast used in budgeting and accounting to allocate costs based on predicted levels of activity such as hours worked or units produced.

Work in Process

Inventory that includes goods in production but not yet completed. It's a stage between raw materials and finished goods in the manufacturing process.