Refer to the Graph Above to Answer This Question

question 52

Multiple Choice

Refer to the graph above to answer this question. All of the following statements except one is correct. Which is the exception?

• A) The LRAC curve illustrates both the advantages of the division of labour and the law of diminishing returns.
• B) Economies, diseconomies and constant returns to scale are illustrated in the LRAC curve.
• C) Given the LRAC curve illustrated, a firm could be too small or too large.
• D) Diseconomies of scale exist at output levels above Q₂.

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Definitions:

Work In Process Inventory

Inventory category in manufacturing representing goods that have been started but not yet completed, highlighting a transition state in production.

Transferred Out

In accounting, it refers to the cost of goods or inventory that has been moved from one production process or department to another in the course of manufacturing.

Weighted-Average Method

A method for computing the cost of goods sold and the remaining inventory value that uses the mean cost of all available units.

Process Costing System

An accounting system used for homogenous products that are mass-produced, assigning costs to units of product based on the process they go through.