Revenues and expenses arising from activities that are not part of the company's operations are classified as ______ revenues an
1 answer:
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Answer:
less than the social cost of producing it
Explanation:
A negative externality is a cost that is suffered by a third party as a result of an economic transaction. In a transaction, the producer and consumer are the first and second parties, and third parties include any individual, organisation, property owner, or resource that is indirectly affected. Externalities are also referred to as spill over effects, and a negative externality is also referred to as an external cost. Some externalities, like waste, arise from consumption while other externalities, like carbon emissions from factories, arise from production. For example, If we consider a manufacturer of computers which emits pollutants into the atmosphere, the free market equilibrium will occur when marginal private benefit = marginal private costs, at output Q and price P. The market equilibrium is at point A. However, if we add external costs, the socially efficient output is Q1, at point B. At Q marginal social costs (at C) are greater than marginal social benefits (at A) so there is a net loss. For example, if the marginal social benefit at A is £5m, and the marginal social cost at C is £10m, then the net welfare loss of this output is £10m - £5m = £5m. In fact, any output between Q1 and Q creates a net welfare loss, and the area for all the welfare loss is the area ABC. Therefore, in terms of welfare, markets over-produce goods that generate external costs. In the market equilibrium, the marginal consumer values the good less than the social cost of producing it.
Answer: Total variable costs at a level of 260,000 units would be $1,74,460.
Explanation:
Total cost at 140,000 units = $249,000 and
Fixed cost = $195,000
Number of units = 140,000
∴ Total variable cost at 140,000 = Total cost - Total fixed cost
= 249000 - 195000
= $94000
Variable cost per unit =
=
= $0.671 per unit
Hence,
Total variable costs at a level of 260,000 units would be = Variable cost per unit × Number of units
= 0.671 × 260,000
= $1,74,460