The Principal Feature of Private Goods Is That

question 52

Multiple Choice

The principal feature of private goods is that

• A) they cannot be rented or purchased.
• B) consumption by one person reduces the quantity available to others.
• C) no one can be excluded from consumption of the product.
• D) externality problems associated with their production are always negative.

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Definitions:

Contribution Margin

The portion of sales revenue that exceeds variable costs, serving to cover fixed expenses and contribute to profits.

Fixed Manufacturing Cost

Involves the expenses that do not fluctuate with the level of production, such as rent for factory premises, salaries of permanent employees, and depreciation of factory equipment.

Relevant Range

The band of normal activity level or volume in which specific cost and revenue relationships hold true.

Mixed Costs

Expenses that have both fixed and variable components, changing in total with the level of activity but not in a directly proportional manner.