Resource Allocative Efficiency Occurs When a Firm

question 65

Multiple Choice

Resource allocative efficiency occurs when a firm

• A)minimizes costs of production yet charges the highest possible price.
• B)produces the quantity of output at which price exceeds average total cost by the greatest amount.
• C)produces the quantity of output at which price equals marginal cost.
• D)produces the quantity of output at which price equals average total cost.
• E)produces the quantity of output at which price equals average variable cost.

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Definitions:

Direct Expense

Costs that can be directly traced to a specific product, service, or department, and is a key factor in the cost of goods sold.

Indirect Expense

Costs that are not directly attributable to a specific cost object, such as a product or service.

Insurance

A contractual arrangement that provides financial protection or reimbursement against losses from an insurance company.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs and generating profit.