Private Markets Fail to Reach a Socially Optimal Level When

question 123

Multiple Choice

Private markets fail to reach a socially optimal level when negative consumption externalities are present because:

• A)social costs equal private costs at the private market solution
• B)private value exceeds social value at the private market solution
• C)private value exceeds social costs at the private market solution
• D)consumption externalities lead to production externalities

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Definitions:

Unit Level Activity

Activities that vary with the number of units produced or sold, directly impacting the cost of goods or services.

Direct Labour-Hours

The total hours worked by employees that can be directly attributed to the production of goods or services.

Overhead Activity

Activities that incur indirect costs, not directly traceable to a product or service but necessary for the production process or service delivery.

Estimated Overhead

An approximation of the expected costs related to manufacturing overhead for a specific period, used for budgeting and costing purposes.