When the Government Sells Something It Produces

question 51

Multiple Choice

When the government sells something it produces,

• A)revenue received must be greater than cost to justify government production
• B)revenue received must equal cost because government is a nonprofit organization
• C)the price does not always reflect the cost of producing the good
• D)the price charged is an accurate measure of the benefits generated
• E)it prices the good the same way a natural monopolist would

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Definitions:

Variable Manufacturing Overhead

Expenses in the production process that vary with the level of production output, such as utilities or materials costs.

Fixed Manufacturing Overhead

Costs that do not change with the level of production output and are required to operate a manufacturing facility, such as rent and salaries of managers.

Machine-Hours

A gauge of manufacturing output or activity determined by the operation duration of machinery.

Machine-Hours

A measure of production time, calculated as the number of hours a machine is operated within a given period, used for allocating machine-related costs.