FIGURE 16-1 -Refer to Figure 16-1.Suppose That the Perfectly Competitive Market with Market

question 35

Multiple Choice

FIGURE 16-1
-Refer to Figure 16-1.Suppose that the perfectly competitive market with no government intervention achieves equilibrium at point A.If the social marginal costs and social marginal benefits are represented by MC₁ and MB₀,respectively,then there exists

• A)a negative external benefit.
• B)a negative external cost.
• C)a positive external benefit.
• D)a positive external cost.
• E)no externalities at all.

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Definitions:

Straight-Line Depreciation

A method used in accounting to allocate the cost of a tangible asset over its useful life evenly.

Electricity Costs

The financial charges for the consumption of electrical energy by a business, forming part of its operating expenses.

Factory Supervisor

A managerial position responsible for overseeing the daily operations of a manufacturing facility, ensuring production targets are met efficiently.

Mixed Cost

A cost composed of a fixed and a variable component and changes in total in response to activity level changes.