Use the Following Information for the Next 4 Questions

question 89

Multiple Choice

Use the following information for the next 4 questions.
A joint process has total costs of $1,200 and yields 50 units each of two main products and 10 units of by-product that can be sold for $2.50 each.
-Under the net realizable value approach to accounting for by-products, the $25 revenue is recognized in the time period that the

• A) By-product is sold
• B) By-product is produced
• C) Main products are produced
• D) Main products are sold

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the benefit consumers receive.

Producer Surplus

The difference between what producers are willing and able to supply a good for and the price they actually receive, measuring the benefit to producers.

Total Surplus

The total net gain to society from creating and consuming a product or service, encompassed by the combination of consumer and producer surplus.

Deadweight Loss

An inefficiency in the economy that results when the market equilibrium for a good or service isn't attained or is unattainable.