Bagel IncReported Net Income of $105,000 for the Year Ended December

question 18

Essay

Bagel Inc.reported net income of $105,000 for the year ended December 31,2014.The following items were included on Bagel's balance sheets at December 31,2014 and 2013:

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Definitions:

Total Surplus

The sum of consumer and producer surplus in a market, indicating the overall economic benefit to society from market transactions.

Socially Efficient

An economic condition where the allocation of resources maximizes social welfare, often where marginal cost meets marginal benefit.

Negative Externalities

Costs that are suffered by a third party as a result of an economic transaction or activity, for which they are not compensated.

Tobacco Industry

The sector of the economy involved in the manufacture, marketing, and sale of tobacco and related products.