Which of the Following Is True at the Level of Output

question 337

Multiple Choice

Which of the following is true at the level of output at which a competitive firm maximizes profit?

• A) Price = marginal cost
• B) Price = Wage/Value of marginal product of labor
• C) Price = Marginal product of labor/wage
• D) All of the above are correct.

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Definitions:

Departmental Predetermined Overhead Rates

The estimated overhead rates assigned to different departments within a company, used for more accurate product costing.

Markup

The amount added to the cost price of goods to cover overhead and profit; a percentage of the cost.

Machine-Hours

A measure of production volume or activity based on the number of hours machines are operated.

Machine-Hours

A measurement used in cost accounting to allocate expenses to products or job orders, based on the number of hours machines are operated.