The Distinction Between Direct and Indirect Costs Depends on Whether

question 121

Multiple Choice

The distinction between direct and indirect costs depends on whether a cost

• A)is controllable or non-controllable.
• B)is variable or fixed.
• C)can be conveniently and physically traced to a cost object under consideration.
• D)will increase with changes in levels of activity.

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Definitions:

Economic Profits

Profits calculated by subtracting both explicit and implicit costs from total revenues; represents the extra amount over the payment needed to keep a resource in its current use.

P = ATC

An equation indicating the price level (P) at which the average total cost (ATC) of production is exactly met, often representing a break-even point for firms in competitive markets.

Pure Monopolist

A single seller in a market with no close substitutes for the product, giving the seller significant control over prices and output levels.

Unregulated Monopolist

A single seller in a market without regulatory oversight, potentially leading to high prices and reduced consumer welfare.