​The Hidden-Cost Fallacy Occurs When

question 64

Multiple Choice

​The hidden-cost fallacy occurs when

• A)​A firm considers irrelevant costs
• B)A firm ignores relevant costs
• C)A firm considers overhead or depreciation costs to make short-run decisions
• D)​Both a and c

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Definitions:

Raw Material

Basic materials that are used in the production process to manufacture finished goods.

Raw Materials

Basic materials and components required in the manufacturing process to produce finished goods.

Direct Labor

Costs associated with employees who directly manufacture or produce goods, such as wages for factory workers.

Overhead

Refers to the ongoing business expenses not directly attributed to creating a product or service, such as rent, utilities, and administrative costs.