If SUVs Produce a Negative Externality,taxing the Buyers of SUVs

question 28

Multiple Choice

If SUVs produce a negative externality,taxing the buyers of SUVs would do which of the following?

• A) shift the private demand curve to the left
• B) shift the private demand curve to the right
• C) shift the private supply curve to the right
• D) shift the private supply curve to the left

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Definitions:

Indirect Material Cost

Costs of materials that are part of the production process but are not directly traceable to a finished product.

Lubricants

Substances applied to reduce friction between surfaces in mutual contact, which ultimately decreases the heat generated when the surfaces move.

Period Cost

Expenses incurred by a business that are not directly tied to production activities, such as administrative and selling expenses.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are a significant portion of the total production cost.