When Individuals and Businesses Are Permitted to Trade Freely Over

question 84

Multiple Choice

When individuals and businesses are permitted to trade freely over a larger market area,

• A) wages will decline to the level of the poorest country in the region.
• B) the monopoly power of business firms will increase.
• C) they will be able to produce a larger output and consume a more diverse bundle of goods.
• D) businesses will be able to earn higher profits, but the income levels of individuals will decline.

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Definitions:

Ending Inventory

The total value of a business’s merchandise, raw materials, and products not yet sold at the end of an accounting period.

FIFO

"First In, First Out," an inventory valuation method where goods first acquired are the first to be sold, used in accounting to calculate the cost of goods sold.

Net Income

The profit of a company after all expenses and taxes have been subtracted from total revenue.

Average Cost Method

An inventory costing method where the cost of goods sold and ending inventory is determined by averaging the cost of all similar items available.