The Principle That a Firm Should Produce Up to the Point

question 159

Multiple Choice

The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing it is known as the

• A) output-maximizing rule.
• B) profit-maximizing rule.
• C) shut-down rule.
• D) break-even rule.

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Definitions:

Carrying Amount

The net value of an asset or liability as presented on the balance sheet, accounting for factors like depreciation or amortization where applicable.

Accrual Basis

Accrual Basis is an accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash is received or paid.

Expenses Recognized

Costs that have been incurred in an accounting period and are matched with revenues in the same period, affecting a company's income statement.

Expenses Paid

Outflows or other using-up of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s ongoing major operations.