Once a Producer Has Chosen a Quantity of Output to Produce

question 2

Multiple Choice

Once a producer has chosen a quantity of output to produce, finding the optimal combination of inputs will depend upon the

• A) price of the output
• B) income of the vendors
• C) cost of the inputs

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Definitions:

Recognize

In tax terminology, to report and include a transaction in taxable income for the period it was realized, regardless of whether or not payment was received.

Gain

An increase in the value of an investment or asset.

Donor's Adjusted Basis

The value used for tax purposes to determine the gain or loss when property is given as a gift, generally the cost basis of the donor at the time of the gift.

Fair Market Value

The price that property would sell for on the open market, between a willing buyer and a willing seller each having reasonable knowledge of all pertinent facts.