When Economists Describe a Market for a Specific Product as Being

question 89

Multiple Choice

When economists describe a market for a specific product as being economically "efficient," what do they mean?

• A)Production techniques are such that resources are used in the most technologically efficient manner.
• B)Consumption of the product is such that economic surplus is maximized.
• C)Production of the product is such that economic surplus is maximized.
• D)The quantity of the product produced and consumed is such that the economic surplus is maximized.
• E)There are no price controls in place in that market.

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Definitions:

Net Operating Income

Profit or loss from a company's operations after all operating expenses are subtracted from operating revenues, but before interest and taxes are deducted.

Variable Costing

Variable costing is an accounting method that only considers variable costs in the calculation of the cost of goods sold, excluding fixed costs.

Net Operating Income

Income derived from normal business operations after subtracting all operating expenses but before interest and taxes.

Absorption Costing

An accounting procedure that integrates all production-related costs, capturing direct material expenses, direct labor costs, and all overheads, variable and fixed, within the cost framework of a product.