Allocative Efficiency Is Achieved When the Marginal Benefit of a Good

question 228

Multiple Choice

Allocative efficiency is achieved when the marginal benefit of a good

• A) exceeds the marginal cost regardless of how much the difference is.
• B) is less than its marginal cost.
• C) is equal to its marginal cost.
• D) equals zero.
• E) exceeds the marginal cost by as much as possible.

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Definitions:

Uncollectible Accounts

Uncollectible accounts are debts owed to a company that are considered uncollectable and are written off as a bad debt expense.

Allowance for Doubtful Accounts

A contra account that represents the estimated amount of accounts receivable which may not be collectible.

Adjusting Entry

An accounting record made to adjust revenues and expenses to match the accounting period they were incurred, ensuring compliance with the accrual basis of accounting.

Allowance Method

An accounting technique used to estimate uncollectible accounts receivable, acknowledging potential losses on credit sales.