​From the Concept of an "Efficient Frontier," the Point on a Frontier

question 32

Multiple Choice

​From the concept of an "efficient frontier," the point on a frontier that is optimal for all firms:

• A) ​is the top point.
• B) ​is the point closest to the vertical axis.
• C) ​is the point halfway between the two end points.
• D) ​cannot be determined since firms vary in their willingness to accept risk.

Know the definition and treatment of residual value in the context of depreciation.

Understand the accounting treatment for the disposal, sale, exchange, and discarding of fixed assets.

Recognize how different transactions affect the recording of gains or losses on assets.

Understand the process for recording the disposal of fixed assets including the role of accumulated depreciation.

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Definitions:

Perfectly Competitive Market

An economic model marked by a multitude of buyers and sellers, with no barriers to entering or leaving, and identical products.

Average Total Cost

The sum of average fixed costs and average variable costs, representing the total cost of production divided by the quantity of output.

Long-run Equilibrium

A state in which all factors of production are fully adjustable, markets are perfectly competitive, and economic agents have no incentive to change their behavior.

Perfectly Competitive Market

A market structure characterized by many buyers and sellers, identical products, no barriers to entry or exit, and perfect information, leading to price takers.