Figure 10-6 -Refer to Figure 10-6.How Large Would a Corrective Tax Need

question 298

Multiple Choice

Figure 10-6
-Refer to Figure 10-6.How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially-optimal outcome?

• A) An amount equal to P' minus P.
• B) An amount equal to P'.
• C) An amount equal to P.
• D) An amount equal to the external cost.

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Definitions:

Machine-Hours

The total hours that machinery is operating during a specific period, often used for allocating manufacturing overhead costs.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to individual units of production.

Machine-Hours

A measure of the amount of time machines are operated, used as a basis for allocating manufacturing overhead costs in production.

Variable Manufacturing Overhead

Refers to the costs that vary with the level of production output, including items such as indirect materials and electricity to run machinery.