If There Are Two Factors Used in Producing a Good

question 50

Multiple Choice

If there are two factors used in producing a good, the least-cost rule specifies that costs have been minimized when

• A)the MPP of the first factor divided by its price is equal to the MPP of the second factor divided by its price.
• B)the MPP of the first factor multiplied by its price is equal to the MPP of the second factor minus its price.
• C)the MPP of the first factor divided by the price of the second factor is equal to the MPP of the second factor divided by the price of the first factor.
• D)the MPP of the second factor minus the MPP of the first factor is equal to the price of the second factor minus the price of the first factor.

---

Definitions:

Accounts Receivable

Represents the money owed to a company by its customers for goods or services delivered but not yet paid for.

Direct Write-off Method

A method of accounting for bad debts that directly writes off specific debts as they are deemed unrecoverable.

Uncollectible Accounts

Uncollectible accounts are debts from customers that a company has attempted to collect but determined they cannot be recovered and are thus written off as a loss.

Expense Recognition Principle

An accounting principle that dictates the conditions under which an expense is recognized and reported in the financial statements.