According to Your Text, We Need an Economy to Produce

question 16

Multiple Choice

According to your text, we need an economy to produce and distribute resources because

• A) One person or household could not produce everything we need for an adequate quality of life.
• B) The economy allows people to earn money,
• C) Corporations need to make profits
• D) The economy ensures that goods and services are distributed equitably in order to produce equality in society.

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Definitions:

Absorption Costing

An accounting method where all manufacturing costs, both fixed and variable, are attributed to the production of products.

Variable Costing

A costing method in which variable manufacturing costs are included in product costs, while fixed manufacturing costs are treated as period costs.

Absorption Costing

An accounting method that assigns all manufacturing costs, both variable and fixed, to products, thereby impacting the inventory valuation on the balance sheet.

Net Operating Income

The profit a company makes from its operations, calculated as total revenue minus operating expenses, excluding taxes and interest.