Consider the Production of Some Industrial Good That Creates Air

question 433

Multiple Choice

Consider the production of some industrial good that creates air pollution. The table below gives the marginal social cost (MSC) , the marginal cost (MC) , and the marginal social benefit (MSB) for each level of output (Q) . The inefficient market quantity is ________ and the efficient market quantity is ________.

• A) 4; 3
• B) 6; 3
• C) 3; 4
• D) 4; 6

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Definitions:

Labour Efficiency Variance

The difference between the actual labor hours taken to produce a good and the standard hours expected, multiplied by the standard labor rate.

Actual Labour Hours

Actual Labour Hours refer to the total hours worked by employees, measured after the work has been completed, usually for comparison with planned or budgeted hours.

Volume Variance

The difference between the expected volume of sales or production and the actual volume, which can impact costs and profits.