The Cost of Producing an Additional Unit of a Good

question 351

Multiple Choice

The cost of producing an additional unit of a good or service that falls on people other than the producer of that good or service is the

• A) marginal external cost.
• B) marginal private cost.
• C) marginal social cost.
• D) None of the above answers is correct.

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Definitions:

Actual Activity

The real or factual actions or tasks completed within a period, often measured to assess performance or productivity.

Static Budget

A financial plan that does not change or adjust with variations in business activity levels.

Labor Rate Variance

The difference between the actual cost of direct labor and its expected (or standard) cost during a given period.

Standard Rate

A predetermined cost per unit of measure or rate that is used in budgeting and costing calculations.