A Positive Externality Results When

question 155

Multiple Choice

A positive externality results when

• A) economists are sure that a good or service provides benefits to consumers.
• B) someone pays for a good or service even though she is not directly affected by the production or consumption of it.
• C) when people who live in one country benefit from the production of a good or service that occurs in another country.
• D) people who are not directly involved in producing or paying for a good or service benefit from it.

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Definitions:

Equivalent Units

The product of the number of partially completed units and their percentage of completion with respect to a particular cost. Equivalent units are the number of complete whole units that could be obtained from the materials and effort contained in partially completed units.

Conversion Costs

The combined costs of direct labor and manufacturing overheads, representing the costs to convert materials into finished goods.

Weighted-Average Method

A cost accounting method that averages the costs of all goods available for sale during the period, regardless of when they were acquired or produced.

First-In, First-Out Method

A method of inventory valuation where the oldest inventory items are recorded as sold first, with the most recent costs remaining in inventory.