In the Short Run, Which Are Most Important in Determining

question 26

Multiple Choice

In the short run, which are most important in determining changes in output?

• A) marginal costs and marginal revenue.
• B) total costs and total revenue.
• C) average costs and total revenue.
• D) fixed costs.

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Definitions:

Inventoriable Costs

Direct costs associated with the acquisition or production of goods that are capitalized as inventory and recognized as cost of goods sold when the inventory is sold.

Matching Principle

A fundamental accounting concept that requires expenses to be recorded in the same period as the revenues they helped generate.

Percentage-of-Completion

An accounting method that recognizes revenue and expenses of long-term projects as a percentage of work completed during the period.

Product Costs

Costs directly associated with the production of goods, including materials, labor, and overhead expenses.