If the Social Benefit of Consuming a Good or a Service

question 31

Multiple Choice

If the social benefit of consuming a good or a service exceeds the private benefit

• A) a negative externality exists.
• B) the market achieves economic efficiency.
• C) a positive externality exists.
• D) the sum of consumer surplus and producer surplus is maximized.

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Definitions:

Factory Overhead

Costs associated with the production process that are not directly tied to specific units of product, such as maintenance, utilities, and salaries of indirect labor.