Answer the Following Questions Using the Information Below

question 6

Multiple Choice

Answer the following questions using the information below:
The Carpentaria Corporation currently uses a manufacturing facility costing $550 000 per year;80% of the facility's capacity is currently being used.A start-up business has proposed a plan that would utilise the other 20% of the facility and increase the overall costs of maintaining the space by 5%.
-If the incremental method were used,what amount of cost would be allocated to the start-up business?

• A)$27 500
• B)$80 000
• C)$84 000
• D)$100 000

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Definitions:

Negative Externality

An adverse effect on a third party not directly involved in a transaction, which results from economic activity without compensation.

Negative Externality

A cost suffered by a third party due to an economic transaction, without compensation.

After-Tax Equilibrium

The balance reached in the market after accounting for the effects of taxes.

Socially Optimal Quantity

The level of output or production that maximizes societal welfare, taking into account all external costs and benefits.