Exhibit 17.3 -Refer to Exhibit 17.3,which Shows Equilibrium in a Market in in a Market

question 165

Multiple Choice

Exhibit 17.3

-Refer to Exhibit 17.3,which shows equilibrium in a market in the presence of an externality.If technology is fixed,the discrepancy between the market output and the efficient level of output is eliminated by _____

• A)subsidizing production of the good by $10 per unit.
• B)imposing a tax of $10 per unit on the firm producing the good.
• C)using a quota system to restrict production to 160 units.
• D)subsidizing production of the good by $5 per unit.
• E)letting the private market operate freely.

Differentiate between manufacturing and merchandising cost terminologies.

Identify and calculate conversion costs.

Recognize the flow of costs in manufacturing activities.

Calculate cost of goods sold (COGS) for a manufacturing firm.

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Definitions:

Stare Decisis

A legal principle that obligates courts to follow historical case law when making rulings on similar cases; it emphasizes legal stability.

Common Law

A body of unwritten laws based on legal precedents established by the courts.

Social Values

Represent the important beliefs or ideals shared by members of a society concerning what is good or bad, and desirable or undesirable.

Public Policy

A governmental policy based on widely held societal values.