Which of the Following Describes the Economic Meanings of Cost

question 149

Multiple Choice

Which of the following describes the economic meanings of cost and price?

• A) Cost is exchange worth, and price is dollar worth.
• B) Cost is what must be given up to produce a good, and price is what a seller receives when the good is sold.
• C) They are the same, and both mean what is received when a good is sold.
• D) Cost refers to what the buyers pay for the good, and price refers to what sellers receive when the good is sold.
• E) Cost refers to the price that buyers must pay to buy the good.

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Definitions:

Fees Earned

Income generated from the provision of services rather than the sale of goods, often recorded as revenue on the income statement.

Accounts Receivable

Funds that clients or customers have yet to pay to a company for products or services already provided.

Accounts Payable

Obligations a company has to pay back to lenders for products and services bought on credit.

Salary Expense

The total amount paid to employees for services rendered during a specific period before any deductions are made.