Which of the Following Most Accurately States the Economic Significance

question 154

Multiple Choice

Which of the following most accurately states the economic significance of exchange?

• A) Physical goods have value because they exist; exchange can neither increase nor decrease their value.
• B) Production of physical goods creates value; exchange merely redistributes this value.
• C) Exchange creates value by moving goods from parties who value them less to parties who value them more.
• D) Exchange reduces value since it consumes resources without adding to the physical supply of goods.

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Definitions:

Automated Production Line

A manufacturing process involving the use of robotics and computer-controlled equipment to perform a sequence of operations automatically.

Direct Labor-Hours

The total number of labor hours spent by workers directly involved in the production process.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products or job orders based on a selected activity base.

Activity-Based Costing

A pricing strategy that attributes overhead and indirect expenses to associated goods and services by determining cost drivers.