When the Factors of Production Are Hired to Produce Output

question 18

Multiple Choice

When the factors of production are hired to produce output, _____.

• A) the costliest resources available in the market are usually employed
• B) the level of spending on goods and services will fall
• C) income is generated for households to spend on goods
• D) firms will use the income they earn to buy goods and services

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of goods sold by a company, including materials and labor.

Costing Inventories

The process of determining the value of inventory, including raw materials, work-in-progress, and finished goods, for financial reporting.

Homogeneous Items

Items that are of the same kind or nature, possessing common features or characteristics.

Inventory Cost Formula

The method used to determine the cost of goods sold, such as First-In, First-Out (FIFO), Last-In, First-Out (LIFO), or Average Cost method.