When a Firm Produces Consumer Goods and Adds Some to Inventory

question 25

Multiple Choice

When a firm produces consumer goods and adds some to inventory rather than selling them, how is the increase in inventory counted in GDP?

• A) It is counted in the current quarter GDP as capital consumption allowance.
• B) It is counted in the current quarter GDP as investment.
• C) It is counted in the current quarter GDP as consumption.
• D) It is counted in the current quarter GDP as a statistical discrepancy.

Identify and differentiate various types of costs, including sunk, incremental, opportunity, and variable costs.

Evaluate make-or-buy decisions considering opportunity costs and total cost implications.

Assess the relevance of specific costs and revenue factors in segment elimination and make-or-buy decisions.

Calculate cash payback period and its importance in assessing investment opportunities.

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Definitions:

Execute Bit

A processor feature used to mark parts of memory as non-executable, enhancing security by preventing certain types of attacks.

Virus

A program designed to change the way a computer originally operated.

BIOS Option

Settings within the Basic Input/Output System (BIOS) interface of a computer, allowing users to configure hardware settings, boot options, and other system behaviors.

BIOS-Stored Program

A fundamental piece of firmware stored on a chip on the motherboard, responsible for booting up the computer and managing data flow between the computer's operating system and attached devices.