Reducing Automobile Pollution Beyond a Certain Point Is Not Efficient

question 2

Multiple Choice

Reducing automobile pollution beyond a certain point is not efficient when:

• A)the marginal benefit from reduced pollution is less than the marginal cost of reducing the pollution.
• B)the marginal cost of reducing pollution is less than the marginal benefit from reduced pollution.
• C)the marginal private cost of producing automobiles is less than the marginal social cost.
• D)the marginal external cost of pollution is zero.

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Definitions:

Manufacturing Overhead

includes all indirect costs related to manufacturing, such as salaries of supervisors and maintenance costs, that are not directly tied to a specific product.

Job-order Costing

A costing method used by companies to assign manufacturing costs to individual products or batches, ideal for customized orders.

Overhead Cost

A rephrased definition: Expenses related to the day-to-day running of a business that are not directly linked to any specific product or service, such as administrative expenses.

Work in Process

The cost of unfinished goods in the manufacturing process including labor, material, and overhead.