Which of the Following Describes a Positive Externality

question 1

Multiple Choice

Which of the following describes a positive externality?

• A)John Henry paints the outside of his house in order to increase its market value just before he puts the house up for sale.
• B)People who do not attend college still benefit from others who receive a college education.
• C)The government imposes a tax on cigarettes in order to discourage smoking among teenagers.
• D)Mary volunteers to drive her neighbor's children to soccer practice.

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Definitions:

Conversion Costs

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

Direct Labor

The cost of wages for employees who are directly involved in the manufacturing or production of goods.

Factory Overhead

All indirect costs associated with manufacturing beyond direct materials and direct labor, such as utilities, maintenance, and depreciation.

Prime Costs

The direct costs of manufacturing an item, which typically include direct labor and direct materials.