When There Is a Negative Externality, the Private Cost of Production

question 116

Multiple Choice

When there is a negative externality, the private cost of production ________ the social cost of production.

• A) is greater than
• B) is equal to
• C) eliminates
• D) is less than

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Definitions:

Accounting Department

A division within a company that is responsible for managing financial records, ensuring compliance with accounting laws, and preparing financial reports.

Organization-Sustaining Activities

Activities that support the organization as a whole rather than any specific product line or department, such as facility management and executive leadership.

Batch-Level Activities

These are tasks or operations that are performed for a batch of products, rather than for each individual unit or continuously for the whole process.

First-Stage Allocation

The process by which overhead costs are assigned to activity cost pools in an activity-based costing system.