When Consumption of a Good or Service Produces Benefits or Costs

question 13

Multiple Choice

When consumption of a good or service produces benefits or costs that are not reflected in the market price for the good, this is known as a(n) :

• A) externality.
• B) common pool problem.
• C) nonexcludable resource.
• D) public good.

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Definitions:

Allocation Base

A criterion or standard used to distribute costs among different cost objects, such as departments or products.

Overhead Costs

Indirect costs incurred in the business process, such as rent, utilities, and administrative expenses, not directly attributable to specific products or services.

Complex

Consisting of many different and connected parts; not simple.

Plantwide Overhead Rate

A single, uniform overhead absorption rate used throughout a manufacturing plant or facility.