Suppose 100 Townspeople Value a Statue of the Local Hero

question 60

Multiple Choice

Suppose 100 townspeople value a statue of the local hero at $1 each, and construction of the statue would cost $90. Which of the following is TRUE?

• A) It would be efficient to build the statue, but it may not be built because some of the townspeople who value the statue will not contribute to its construction.
• B) It would be efficient to build the statue and it will be built because at least ninety of the townspeople will contribute to its construction.
• C) The statue will not be built because it is not efficient to build a statue that costs $90 if the townspeople value it at only $1.
• D) The statue will not be built because the local government does not have the power to tax only those who value it.

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Definitions:

Activity-Based Costing

An approach to costing that recognizes organizational activities and distributes each activity's costs to every product and service, reflecting their real consumption.

High-Low Method

A technique used in cost accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.

Variable Cost

A cost that varies directly with the level of production or sales volume, such as materials and labor costs.

Regression Study

An analysis technique used to determine the relationship between dependent and independent variables, often used for prediction and forecasting.