An Externality Is Defined as

question 34

Multiple Choice

An externality is defined as

• A)an additional cost imposed by the government on producers.
• B)an additional gain received by consumers from decisions made by the government.
• C)a cost or benefit that arises from production and falls on someone other than the producer, or a cost or benefit that arises from consumption and falls on someone other than the consumer.
• D)a marginal social cost.
• E)the additional amount consumers have to pay to consume an additional amount of a good or service.

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Definitions:

Standard Cost

A predetermined cost of manufacturing, delivering, or producing goods or services under normal conditions.

Variance Accounts

Financial accounts used to record the differences between planned and actual figures in budgeting and accounting.

Favorable Variances

Differences between planned and actual performance that result in a better-than-expected financial outcome.

Materials Price

The cost associated with acquiring raw materials required for production or manufacturing processes.