One Difference Between the Demand for a Private Good and That

question 75

Multiple Choice

One difference between the demand for a private good and that for a public good is that

• A)with a private good, each consumer chooses the quantity she wants to consume but with a public good, each consumer chooses the price she is willing to pay for a fixed quantity.
• B)with a private good, each consumer chooses the quantity she wants to consume but with a public good, everyone consumes the same quantity.
• C)with a private good, each consumer receives different amounts of benefit from consuming the product but with a public good, every consumer realizes the same amount of benefit from consuming the product.
• D)the marginal benefit from consuming the last unit of a public good always exceeds the marginal benefit from consuming the last unit of a private good because there are externalities in the consumption of the public good.

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Definitions:

Variable Costing

An accounting method that includes only variable costs—direct materials, direct labor, and variable manufacturing overhead—in product cost calculations.

Absorption Costing

A product costing technique in accounting that involves adding direct materials, direct labor, and both kinds of manufacturing overhead—variable and fixed—to the product's cost.

Fixed Manufacturing Overhead

Costs that do not change with the level of production output, including rent, salaries of permanent staff, and depreciation of factory equipment.

Variable Costing

An accounting method that includes only variable production costs in the cost of goods sold, excluding fixed costs.