A Firm Is Producing 10,000 Units of Output in Two

question 88

Multiple Choice

A firm is producing 10,000 units of output in two plants,A and B,and each plant is producing 5,000 units of output.The marginal cost in plant A is $10 and the marginal cost in B is $6.To reduce the cost of producing 10,000 units the firm should

• A)produce more in A and less in B.
• B)produce less in A and more in B.
• C)produce it all in B because B is the lower cost plant.
• D)do nothing since the output in each plant is equal.

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Definitions:

Interest Accrue

The accumulation of interest expenses or revenues that have been incurred but not yet paid or received in cash.

Note Payment

The process of repaying the principal and/or interest on a promissory note or loan.

IFRS

International Financial Reporting Standards, which are a set of accounting principles used globally to ensure financial reporting consistency and transparency.

Current Liabilities Netted

The process of offsetting current assets against current liabilities to determine the net working capital or financial position in the short term.