Why Is Fair Value Not Normally Used to Value Capital

question 57

Multiple Choice

Why is fair value not normally used to value capital assets?

• A)Because it is less comparable than historical cost.
• B)Because it is less relevant than historical cost.
• C)Because it is less consistent than historical cost.
• D)Because it is less reliable than historical cost.

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Definitions:

MC

Short for Marginal Costs, representing the additional cost incurred in producing one additional unit of a good or service.

AVC

Average Variable Cost, which is the total variable costs of production divided by the quantity of output produced.

ATC

Average Total Cost, which is the total cost of production divided by the quantity of output produced, a key concept in microeconomic analysis.

Marginal Cost

The cost added by producing one additional unit of a product or service, crucial in decision-making on production and pricing.