Assuming No Externalities Exist, If a Good's Price Is Less

question 62

Multiple Choice

Assuming no externalities exist, if a good's price is less than its marginal cost, then the benefits consumers derive are

• A) greater than the cost of resources needed to produce it and less should be produced.
• B) greater than the cost of resources needed to produce it and more should be produced.
• C) less than the cost of resources needed to produce it and less should be produced.
• D) less than the cost of resources needed to produce it and more should be produced.

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Definitions:

Underapplied

A situation in which the allocated or applied costs in accounting are less than the actual costs incurred.

Standard Costing System

An accounting method that applies predetermined costs to measure the cost of goods sold and performance.

Continuous Improvement

An ongoing effort to improve products, services, or processes by making incremental improvements over time or breakthrough improvements all at once.

Process Perspective

An approach to management that focuses on the optimization and improvement of business processes to achieve better performance and outcomes.