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:

Flexible Budget

A budget that adjusts or flexes with changes in the level of activity or volume of production.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaries of production supervisors, not directly tied to the production of an individual product.

Spending Variance

The difference between the budgeted or standard cost of something and its actual cost, often analyzed in budgeting and cost control.

Units

The measures or quantities of a product, service, or resource, which are accounted for in business transactions.