The Income Statement and Statement of Financial Position Columns of Reed

question 117

Multiple Choice

The income statement and statement of financial position columns of Reed Company's worksheet reflect the following totals: The net income (or loss) for the period is

• A) $45,000 income.
• B) $13,000 income.
• C) $13,000 loss.
• D) not determinable.

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Definitions:

Allocative Efficiency

A state of the economy in which production is in accordance with consumer preferences; every good or service is produced up to the point where the last unit provides a utility to consumers equal to the cost of producing it.

Consumer Surplus

The difference in the amount consumers are prepared and have the means to pay for a service or good compared to the amount they actually do pay.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, often depicted as the area above the supply curve and below the market price.

Average Cost

The total cost of production divided by the number of goods produced; also known as per unit cost.