Tradeable Allowances

question 118

Multiple Choice

Tradeable allowances:

• A)are typically hard to pass through the Environmental Protection Agency (EPA) since they allow firms to legally
• Pollute.
• B)are an efficient way to reduce pollution at lower costs.(True Answer )Correct
• C)decrease the profitability of firms since now they have to pay for the rights to pollute.
• D)are equal to the social surplus in the market.

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Definitions:

Work in Process Inventories

Partially completed goods that are still undergoing the production process.

Standard Fixed Manufacturing Overhead Rate

This refers to the predetermined rate at which fixed manufacturing overhead costs are allocated to units of production, based on an expected level of activity.

Work in Process

Goods in various stages of production, not yet completed but not as raw materials, within a manufacturing process.

Fixed Manufacturing Overhead Standards

Pre-determined benchmarks for the fixed costs involved in the production process, not varying with the level of output.