-The Figure Above Shows the Market for a Good with an External

question 116

Multiple Choice

-The figure above shows the market for a good with an external benefit.If the market is competitive and the government takes no action,the equilibrium quantity of ________ units is inefficient because ________.

• A) 8; marginal benefit exceeds marginal cost
• B) 8; marginal cost exceeds marginal benefit
• C) 10; marginal cost exceeds marginal benefit
• D) 10; marginal social benefit exceeds marginal benefit
• E) 10; marginal external benefit exceeds marginal social benefit

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Definitions:

Process Costing

A costing method used for homogeneous products, where costs are accumulated for a continuous process and assigned to batches of products.

Lean Production

A manufacturing philosophy that focuses on minimizing waste within manufacturing systems while simultaneously maximizing productivity.

FIFO Method

"First In, First Out," an inventory valuation approach where goods first produced or purchased are the first to be sold, useful in managing inventory and cost of goods sold.

Equivalent Units

A concept in accounting used to apportion costs to partially completed goods, converting them into the number of finished goods units.