Economic Cost Differs from Accounting Cost in That

question 27

Multiple Choice

Economic cost differs from accounting cost in that:

• A)the former includes implicit costs, while the latter does not.
• B)the latter counts true depreciation, while the former uses arbitrary rules.
• C)the former is used to calculate both economic and accounting profit.
• D)the latter includes depreciation, while the former does not.

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Definitions:

Flexible Capacity

Denotes the ability of a business or production system to adjust output levels or operations in response to changes in demand or market conditions.

Demand Uncertainty

The inability to accurately forecast consumer demand, leading to challenges in supply chain planning and inventory management.

Price Uncertainty

The unpredictability of the cost of goods or services in the future, affecting budgeting and planning.

Warehousing Space

The area available for the storage of goods in a warehouse, crucial for inventory management and logistics.