The Following Companies All Manufacture Widgets and Dump Tons of Glop

question 80

Multiple Choice

The following companies all manufacture widgets and dump tons of glop into the air. The government wants to halve total pollution but does not know how much it will cost each company. If the government employs a tradable permit scheme in which it gives the same number of permits to each manufacturer at no cost, the number of permits traded would be ____.

• A) 50
• B) 100
• C) 150
• D) 200

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Definitions:

Physical Units

A measure of product expressed in terms of tangible units, such as pieces or gallons, rather than in monetary value.

Weighted Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the weighted average of all units available for sale.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, converting them into an amount of fully completed units.

Conversion Activity

The process of transforming raw materials or components into finished goods or services.