The External Benefit of a Good

question 320

Multiple Choice

The external benefit of a good

• A) equals its consumer surplus.
• B) equals its producer surplus.
• C) equals its total surplus.
• D) is a benefit from the good falling on people who are not the consumers of the good.

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Definitions:

Operating Income (EBIT)

Earnings Before Interest and Taxes, a measure of a company's profitability from its operations.

Dollar Sales

The total revenue generated from the sale of goods or services, measured in dollars.

Financial Leverage

The use of borrowed funds (debt) to amplify returns from an investment, which can increase the potential for profit as well as loss.

Variable Cost Ratio

The proportion of variable costs to total sales, indicating how variable costs change with sales levels.