Scenario 13-4 Suppose That a Given Firm Experiences Decreasing Marginal Product of Product

question 156

Multiple Choice

Scenario 13-4
Suppose that a given firm experiences decreasing marginal product of labor with the addition of each worker regardless of the current output level.
-Refer to Scenario 13-4.Average total cost will be

• A)rising at all points.
• B)falling at all points.
• C)constant.
• D)U-shaped.

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Definitions:

Joint Products

Products that are generated together in a production process and cannot be produced independently of each other.

Net Realizable Value

The estimated selling price of an item of inventory less any direct costs of disposal, such as sales commissions; the value of the receivables reduced to the amount that is expected to be collected or realized, computed as accounts receivable less allowance for doubtful accounts.

Cost Center

A department or function within a business that does not directly contribute to profit but incurs costs, used for performance evaluation and budgeting.

Physical Units Method

An approach to allocating joint costs based on the number of physical units produced at a certain stage in manufacturing.