External Economies of Scale Exist When an Industry's Outputs Increase

question 87

Multiple Choice

External economies of scale exist when an industry's outputs increase and

• A) a firm's long run average cost curve shifts downward.
• B) a firm's long run average cost curve shifts upward.
• C) a firm's long run average cost curve stays the same.
• D) a firm's long run average cost curve hits zero.

Determine the net operating income (loss) under both absorption costing and variable costing.

Compute the amount of fixed manufacturing overhead released from or deferred in inventories.

Analyze the impact of production and sales levels on net operating income under both costing methods.

Recognize the financial statement presentation and implications of absorption and variable costing methods.

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Definitions:

Real Assets

Assets that have physical form or are tangible, such as real estate, commodities, or natural resources, as opposed to financial assets like stocks or bonds.

Wealth Distribution

The manner in which wealth is shared among individuals in a society, often analyzed for its levels of equality or inequality.

Coincidence of Wants

A situation in a barter economy where two parties each possess goods or services that the other wants, facilitating a direct exchange without the need for money.

Barter

The direct exchange of one good or service for another good or service.