Suppose the Short-Run Production Function Is Q = 10 ∗

question 1

Multiple Choice

Suppose the short-run production function is q = 10 ∗ L.If the wage rate is $10 per unit of labor,then AFC equals

• A) 0.
• B) 1.
• C) 10/q.
• D) It cannot be determined from the information provided.

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Definitions:

Weighted-Average Method

A costing approach for inventory that determines the cost of goods sold and the final inventory value by averaging the cost of all available units for sale over the period.

Process Costing

An accounting methodology used to allocate the costs of producing products that are indistinguishable from each other and are produced in a continuous process.

Weighted-Average Method

A method for valuing inventory that determines the cost of goods sold and the final inventory value by computing the average cost of all products available for sale throughout the period.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, which are incurred to convert raw materials into finished goods.