The Following Diagram Shows One Indifference Curve Representing the Preferences

question 167

Multiple Choice

The following diagram shows one indifference curve representing the preferences for goods X and Y for one consumer.
What is the marginal rate of substitution between points A and B?

• A) 2/5
• B) 1
• C) 5/2
• D) 3

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Definitions:

Process Costing System

A method of costing used where identical or highly similar goods are produced, assigning costs to units of product based on the process they undergo.

Weighted-Average Method

An inventory costing method that averages the cost of goods available for sale and assigns the average cost to both the cost of goods sold and remaining inventory.

Equivalent Units

Equivalent units are a concept in cost accounting used to compute the number of units that could have been completed given the amount of work done, taking partially completed units into account.

Transferred-In Costs

Costs associated with units of product moved from one production process to another in the manufacturing cycle.