When Main Street Bank Buys New Automatic Teller Machines, the Quantity

question 163

Multiple Choice

When Main Street Bank buys new automatic teller machines, the quantity of _____ in the economy increases.

• A) land and natural resources
• B) labor
• C) physical capital
• D) entrepreneurial ability, technology, and ideas

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Definitions:

Unused Capacity

The available production or service capacity that is not being used, often considered when planning production schedules and resource allocation.

Period Expense

Expenses that are not directly tied to the production process and are charged to the periods in which they are incurred.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual products or job orders, based on a related activity (e.g., machine hours or labor hours).

Predetermined Overhead Rate

A predetermined rate for allocating manufacturing overhead to products or job orders, established prior to the period by forecasting both overhead expenses and activity volumes.