An Economy Is Operating with Optimum Efficiency If

question 126

Multiple Choice

An economy is operating with optimum efficiency if

• A)the price of the product is greater than marginal cost.
• B)the production of more of commodity A entails the production of less of commodity B.
• C)marginal cost of output is greater than marginal utility of output.
• D)an increase in output would result in a decrease in average cost per unit.

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Definitions:

Direct Labor Hours

The total hours worked by employees directly involved in manufacturing products or delivering services.

Direct Materials

Raw materials directly used in the manufacturing of a product, easily traceable to the finished good.

Total Cost

The complete cost of producing goods or services, including fixed and variable costs.

Predetermined Overhead Rate

The rate used to allocate overhead costs to products or cost objects, determined at the beginning of the accounting period.