Consider a Product (Say,tulip Bulbs)that Generates Positive Externalities When It

question 46

Multiple Choice

Consider a product (say,tulip bulbs) that generates positive externalities when it is consumed (other people enjoy looking at them) .In this case,

• A)the government could tax the production of this good to improve efficiency.
• B)at market equilibrium,the marginal social benefit is less than the marginal cost of producing the last unit.
• C)at the market equilibrium,the output would be greater than the socially optimal amount.
• D)too few tulips will be produced and consumed unless external benefits are internalized.
• E)at the market equilibrium,the price is too high to be allocatively efficient.

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Definitions:

Production Supervisors

Individuals responsible for overseeing the production process and ensuring that manufacturing operations are carried out efficiently.

Manufacturing Overhead Applied

The allocation of manufacturing overhead costs to individual units of product based on a predetermined rate or activity base.

Direct Materials

Materials directly related and identifiable in the production of a particular item.

Finished Goods

Products that are finished being made but haven't been purchased by consumers yet.