When Competition Is Present, Self-Interested Business Decision Makers Have a Strong

question 226

Multiple Choice

When competition is present, self-interested business decision makers have a strong incentive to

• A) produce efficiently.
• B) ignore the wishes of customers who are also self-interested.
• C) adopt technological improvements slowly in order to avoid making wrong decisions
• D) maximize price in order to maximize profits.

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Definitions:

Periodic Inventory System

An accounting method that updates inventory levels and cost of goods sold at the end of an accounting period, not continuously.

Merchandise Inventory

The goods or products that a retailer or wholesaler intends to sell to customers for a profit.

Purchase Discounts

Reductions in the cost price of goods or services that are offered to purchasers when they pay within a specified period or meet certain conditions, aimed at encouraging prompt payment.

Transportation-In

Costs incurred for shipping materials to a company, typically considered part of the inventory cost when calculating the cost of goods sold.