It Is Assumed in Standard Economic Theory That a Firm

question 85

Multiple Choice

It is assumed in standard economic theory that a firm makes decisions in an effort to

• A)become as large as possible.
• B)have a highly diversified product.
• C)be favoured politically.
• D)maximize its revenue.
• E)maximize its profits.

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Definitions:

Fixed Factory Overhead

Indirect, consistent costs associated with operating a manufacturing facility, such as salaries of supervisors and rent.

Normal Standards

The expected performance or cost levels under normal operating conditions, used for budgeting or measuring efficiency.

Ideal Standards

Benchmark or optimal performance levels set in managerial accounting to evaluate operational efficiency, without considering any business constraints.

Theoretical Standards

Idealized cost and efficiency targets in manufacturing or production, based on perfect operating conditions.