Use the Figure Below to Answer the Following Question

question 115

Multiple Choice

Use the figure below to answer the following question.

Figure 5.3.4
-Refer to Figure 5.3.4. The graph shows the market for cell phones. When production is efficient, total surplus is ________ and the cost of producing the cell phones sold is ________.

• A)$2,250; $2,250
• B)$2,250; $3,000
• C)$1,500; $750
• D)$750; $1,500
• E)$1,500; $2,250

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Definitions:

Treasury Stock

Shares that were once part of the float and outstanding shares but were subsequently purchased back by the issuing company, reducing the amount of outstanding stock on the open market.

If-converted Method

An accounting method used to calculate earnings per share, assuming all convertible securities were transformed into common stock.

Diluted Earnings

Earnings per share calculated using the assumption that all convertible securities have been converted to common stock, potentially lowering earnings per share.

Comparability

A quality of accounting information that allows users to analyze and compare financial data from different periods and entities in order to make informed decisions.