If a Producer Must Pay the Cost of His or Her

question 218

Multiple Choice

If a producer must pay the cost of his or her pollution because property rights have been assigned,then

• A) pollution will be completely eliminated.
• B) the supply curve will shift rightward as the new costs are added.
• C) the supply curve will shift leftward as the new costs are added.
• D) consumers will now consume more of the good because the external costs are reduced.
• E) there is no longer any marginal benefit from the good or service being produced.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials and the standard cost multiplied by the quantities purchased.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, based on the standard cost.

Materials Quantity Variance

The discrepancy between the actual use of materials in production and the planned use, each multiplied by the predetermined cost per unit.

Variable Overhead

Indirect manufacturing costs that vary with the level of production activity, such as utilities for the manufacturing plant.