Use the Following Two Statements to Answer This Question

question 63

Multiple Choice

Use the following two statements to answer this question. (I) In a market system, resource prices both provide incentives for the efficient allocation of resources and determine income distribution.
(II) Income and wealth are neither created nor destroyed, they are just fixed-sized pies to be allocated among individuals.

• A) Both I and II are true.
• B) Both I and II are false.
• C) I is true; II is false.
• D) I is false; II is true.

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Definitions:

LIFO

An inventory valuation method standing for Last-In, First-Out, where the most recently acquired items are assumed to be sold or used first.

FIFO

FIFO (First In, First Out) is an inventory valuation method where the oldest inventory items are recorded as sold first.

Fair Value

The estimated market value of an asset or liability, based on current market prices.

Cost of Goods Sold

An accounting term that represents the direct costs attributable to the production of the goods sold by a company.