Expenses

question 74

Multiple Choice

Expenses:

• A) are costs the company incurs in carrying on operations.
• B) are a subdivision of Owner's Equity.
• C) record personal Expenses not related to the business.
• D) Both A and B are correct.

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Definitions:

Long-run Total Costs

The total costs incurred by a firm when all factors of production are variable, and the firm can change its scale of operation.

Opportunity Cost

The expense incurred by not choosing the second-best option available during the decision-making process.

Bank Loan

A sum of money borrowed from a bank that must be repaid with interest over a set period.

Diminishing Marginal Product

The principle that as the quantity of a factor of production increases, holding all other inputs constant, the additional output generated by one more unit of that factor will eventually decrease.