When the Government Both Provides a Service and Covers Its

question 115

Multiple Choice

When the government both provides a service and covers its costs through taxation,

• A) the government has a strong incentive to supply consumers with desired goods at a low cost.
• B) consumers are in a weak position to either discipline the suppliers or alter the quantity or quality of the service provided.
• C) the invisible hand will direct decision makers toward the most efficient level of output.
• D) Consumers have strong incentive to be cost conscious.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Absorption Costing

An accounting method that includes all of the manufacturing costs in the cost of a product, including direct materials, direct labor, and both variable and fixed overhead.

Profits

The financial gain made in a transaction or business operation after subtracting all expenses from revenue.

Units Produced

The total quantity of finished goods a manufacturing process produces in a specific period, reflecting production levels and efficiency.