When Positive Consumption Externalities Are Present in a Market

question 107

Multiple Choice

When positive consumption externalities are present in a market:

• A)private benefits are less than social benefits.
• B)private benefits are less than external benefits.
• C)social benefits are less than external benefits.
• D)external benefits are equal to social benefits.

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Definitions:

Factory Burden

Another term for manufacturing overhead or factory overhead.

Managerial Accounting

The process of identifying, measuring, analyzing, and communicating financial information to managers for the pursuit of an organization's goals.

Product Costs

Expenses directly tied to the creation of products, including direct materials, direct labor, and factory overhead.

Factory Overhead Cost

All indirect costs associated with manufacturing, including utilities, maintenance, and manager salaries, but not direct materials or direct labor.