For a Good Whose Production Creates an External Cost,the Efficient

question 28

Multiple Choice

For a good whose production creates an external cost,the efficient quantity of output is

• A) where the market demand curve and the market supply curve intersect.
• B) where the marginal social cost curve and marginal benefit curve intersect.
• C) as low as possible.
• D) zero.
• E) the amount of production so that the marginal social benefit exceeds the marginal social cost by as much as possible.

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Definitions:

Period Costs

Expenses that are not directly associated with the production process and are expensed in the period they are incurred.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and regulators.

Direct Manufacturing Cost

Expenses that are directly attributable to the production of goods, including materials and labor directly involved in the manufacture.

Period Costs

Expenses that are not directly tied to the production process and are instead charged to the period in which they are incurred.