At the Output Where the Combined Amounts of Consumer and Producer

question 1

Multiple Choice

At the output where the combined amounts of consumer and producer surplus are largest,

• A)the areas of consumer and producer surplus necessarily are equal.
• B)the maximum willingness to pay for the last unit of output equals the minimum acceptable price of that unit of output.
• C)consumer surplus exceeds producer surplus by the greatest amount.
• D)marginal benefit exceeds marginal cost by the greatest amount.

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Definitions:

Machine-Hours

A unit of measure representing the operation time of a machine, often used in allocating manufacturing costs based on machine usage.

Fixed Overhead Volume Variance

The difference between the budgeted fixed overhead and the applied fixed overhead, which is attributed to the variance in the volume of production.

Standard Labor-Hours

A measurement used in accounting to represent the number of labor hours expected to produce one unit of output.

Manufacturing Overhead Applied

The allocation of manufacturing overhead to specific jobs or product units based upon the predetermined overhead rate.