Question : 21) Suppose the marginal cost of the fourth unit of : 1241096

Economics

21) Suppose the marginal cost of the fourth unit of a public good is $20. If Mark and Judy are the only members of society, and they are willing to pay $10 and $11, respectively, for the fourth unit of the good, then the efficient quantity is

A) 3 units.

B) 4 or more units.

C) 0 units.

D) More information is needed about the marginal benefits of the first, second, and third units of the public good.

E) None of the above answers is correct.

22) Suppose the government is producing a public good. If the marginal benefit of the last unit of a public good produced is greater than the marginal cost of that unit, to achieve the efficient amount of production, what should be done?

A) The government should produce more units.

B) The government should cease production.

C) Private firms should take over the production and sale of the good.

D) Nothing, because the government is already producing the efficient quantity of the public good.

E) The government should produce fewer units.

23) Paul and Paula are the only members of society. The table above gives their marginal benefits from missile gunboats, a public good. Determine the marginal benefit to society of the second missile gunboat.

A) $16 million

B) $8 million

C) $12 million

D) $10 million

E) $4 million

24) Paul and Paula are the only members of society. The table above gives their marginal benefits from missile gunboats, a public good. Determine the marginal benefit to society of the fourth missile gunboat.

A) $8 million

B) $4 million

C) $2 million

D) $1 million

E) $40 million

25) Paul and Paula are the only members of society. The table above gives their marginal benefits from missile gunboats, a public good. Suppose the marginal cost of a missile gunboat is $8 million. What is the efficient quantity of missile gunboats?

A) 1 boat

B) 2 boats

C) 3 boats

D) 4 boats

E) More information about whether the services provided by missile gunboats are rival or not is needed.

Minutes of fireworks

Anita’s MB (dollars per minute)

Steve’s MB (dollars per minute)

$20

$28

26) The table above shows Anita and Steve’s marginal benefits for the annual 4th of July fireworks show at City Park. If Anita and Steve are the only two people in the economy, what is the economy’s marginal benefit from the 18th minute of fireworks?

A) $38

B) $33

C) $30

D) $162

E) $129

27) The table above shows Anita and Steve’s marginal benefits for the annual 4th of July fireworks show at City Park. If Anita and Steve are the only two people in the economy, what is the economy’s marginal benefit from the 19th minute of fireworks?

A) $38

B) $30

C) $162

D) $129

E) $33

28) The table above shows Anita and Steve’s marginal benefits for the annual 4th of July fireworks show at City Park. If Anita and Steve are the only two people in the economy and the marginal cost to produce one minute of fireworks is $28, what is the efficient quantity of fireworks?

A) 16 minutes

B) more than 20 minutes

C) 19 minutes

D) less than 16 minutes

E) 20 minutes

29) The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo, Oklahoma. Police protection is a public good. If the city of Hugo hires 25 officers, then

A) marginal cost will exceed marginal benefit, which means that the efficient number of officers is more than 25.

B) marginal cost will exceed marginal benefit, which means that the efficient number of officers is less than 25.

C) marginal benefit will exceed marginal cost, which means that Hugo should reduce the number of officers they hire.

D) marginal benefit equals marginal cost.

E) None of the above answers is correct.

30) The figure above shows the marginal cost and marginal benefit of police protection in the city of Hugo, Oklahoma. Police protection is a public good. If the city of Hugo hires 5 officers, marginal

A) cost exceeds marginal benefit, so therefore fewer officers should be hired.

B) benefit exceeds marginal cost, so therefore more officers should be hired.

C) benefit equals marginal cost.

D) benefit exceeds marginal cost, so therefore no more officers should be hired.

E) benefit exceeds marginal cost but not by as much as possible, so 5 officers is not the efficient number to be hired.

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July 1, 2023

11) Which of the following illustrates a purpose for allocating costs to cost objects?

A) to provide information for economic decisions

B) to reduce competition

C) to determine employee benefit costs

D) to defer income and reduce taxes payable

E) to motivate employees

12) Deciding whether to make a component part or to purchase it, would be an example of which cost allocation purpose?

A) to provide information for economic decisions

B) to motivate managers

C) to determine employee's wages

D) to measure income and assets for reporting to external parties

E) to motivate employees

13) For the economic decision purpose

A) the costs in all six business functions should be included.

B) costs for only one function is included.

C) period costs are not allocated.

D) costing is only related to product pricing.

E) only inventoriable costs under GAAP/IFRS should be included.

14) Which of the following criteria subsidizes poor performers at the expense of the best performers?

A) ability to bear

B) benefit received

C) causality

D) fairness and equity

E) benefits expended

15) The belief that a corporate division with higher sales ought to be allocated more of the company's advertising costs because it must have derived more benefit from the expenditures than a division with lower sales, is an example of which criteria for cost allocation decisions?

A) ability to bear

B) benefits expended

C) causality

D) fairness and equity

E) benefit received

16) Which of the following is not a common criteria used to guide decisions related to cost allocations?

A) ability to bear

B) benefit received

C) causality

D) fairness and equity

E) stable market prices

17) Which of the following is the first step in the cost-allocation decision process?

A) Calculate the cost-allocation rate for each indirect cost pool.

B) Identify the purpose of the cost allocation.

C) Identify the direct inputs that are already measured.

D) Identify the relevant indirect costs included in the cost pool(s) or numerator(s).

E) Analyze the alternatives and select the best one for the denominator.

18) Which of the following is true concerning cost allocation in a multi-product company?

A) Where the indirect costs are variable and each product is assembled sequentially, the causality criterion can guide the choice of a cost allocation base.

B) Where the indirect costs are fixed and each product is assembled sequentially, the causality criterion can guide the choice of a cost allocation base.

C) Where the indirect costs are variable and each product is not assembled sequentially, the causality criterion can guide the choice of a cost allocation base.

D) Where the indirect costs are fixed and each product is not assembled sequentially, the causality criterion can guide the choice of a cost allocation base.

E) Where the indirect costs are variable and the products are produced jointly, it is not possible to identify specific cause-and-effect relationships between work on an individual product and total costs incurred.

19) Which purpose of cost allocation is used to encourage sales representatives to push high-margin products or services?

A) to provide information for economic decisions

B) to motivate managers and other employees

C) to justify costs

D) to measure income and assets for reporting to external parties

E) to compute reimbursement

20) Which purpose of cost allocation is used to decide on the selling price for a customized product or service?

A) to provide information for economic decisions

B) to motivate managers and other employees

C) to justify costs

D) to measure income and assets for reporting to external parties

E) to compute reimbursement