A Marginal External Cost of a Product Is Equal to

question 53

Multiple Choice

A marginal external cost of a product is equal to

• A) what the producer has to pay to hire resources to produce another unit.
• B) the cost someone other than the producer incurs when another unit is produced.
• C) the cost the producer incurs to produce another unit.
• D) what the consumer must pay when he or she buys the good or service.
• E) None of these answers describes a marginal external cost.

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Definitions:

Transferred In Costs

Costs associated with items that are partially produced in one department of a company and then moved to another department for further processing or completion.

Process

A series of actions or steps taken in order to achieve a particular end.

Homogeneous Products

Goods that are essentially identical in quality and function, making them indistinguishable from one another to consumers.

Process Costing Systems

Accounting methods used to allocate production costs to products or services in continuous processes, where the products are indistinguishable from each other.