If the Free Market Is Called Upon to Provide Public

question 106

Multiple Choice

If the free market is called upon to provide public goods, then:

• A) there will more public goods provided than is optimal.
• B) there will be fewer public goods provided than is optimal.
• C) the market will provide the optimal number of public goods.
• D) the market price will be correct, and the optimal amount of output of public goods will be produced .

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Definitions:

Prime Costs

The combined costs of direct material and direct labor required to produce a good.

Conversion Costs

Costs incurred to convert raw materials into finished goods, including direct labor and manufacturing overhead.

Prime Costs

The combination of direct materials and direct labor costs that are directly attributable to the production of goods.

Nonmanufacturing Cost

Expenses not directly involved in the production of goods, such as selling, administration, and other overhead costs.