Operating Activities Are Transactions and Events Associated with Selling a Product

question 47

Multiple Choice

Operating activities are transactions and events associated with selling a product or providing a service related to

• A) the revenues and expenses reported on the income statements.
• B) the assets and liabilities reported on the balance sheet.
• C) the net income reported on the statement of retained earnings.
• D) the retained earnings reported on the balance sheet.

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Definitions:

Short-Run Average Total Cost (ATC₂)

The total cost divided by the quantity produced in the short-run, where some inputs are fixed.

Diminishing Marginal Returns

A principle stating that if one factor of production is increased while others are kept constant, the resulting increase in output will eventually decline.

Short-Run Average Total Cost (ATC)

The total cost per unit of output in the short run, where some factors of production are fixed.

Profit-Maximizing Level

The output level at which a firm achieves the highest profit, where marginal revenue equals marginal cost.