Amy Can Study for an Hour or Spend That Hour

question 56

Multiple Choice

Amy can study for an hour or spend that hour sleeping or going out for dinner.If she decides to study for the hour,the opportunity cost of the hour spent studying is

• A) definitely going to sleep.
• B) studying since this is the choice she opted for.
• C) sleeping or going out for dinner, whichever she would have preferred the most.
• D) sleeping and going out for dinner.
• E) definitely going out to dinner because she must eat at some time.

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Definitions:

Operating Income

A measure of a company's profitability from its regular business operations, excluding income and expenses from non-operating activities.

Incremental Costs

Costs that change as a result of a new policy, project, or decision, essentially the difference in total costs between two alternatives.

Direct Materials

Raw materials that can be directly attributed to the production of finished goods.

Finished Units

Products that have completed the manufacturing process and are ready for sale or distribution to customers.