Consider a Setting in Which There Is a Positive Externality,but

question 28

Multiple Choice

Consider a setting in which there is a positive externality,but no negative externality.The market outcome is __________________; government can bring about the ___________________ outcome if it sets a subsidy equal to the __________________.

• A) inefficient; efficient; MEB
• B) inefficient; efficient; MEC
• C) efficient; inefficient; MPC
• D) inefficient; efficient; MPB
• E) inefficient; efficient; MSB

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Definitions:

Direct Fixed Costs

Expenses that are consistent and directly tied to the production of goods or services but do not vary with the level of output.

Common Fixed Costs

Expenses that do not change with the volume of production or sales and are shared among multiple products or services within a company.

Noncontrollable Fixed Costs

Costs that cannot be altered or influenced by the decisions of management in the short term.

Controllable Margin

The portion of income that can be directly controlled or influenced by managerial decisions, excluding fixed costs.