At the Point Where the Consumption Schedule Intersects the 45-Degree

question 68

Multiple Choice

At the point where the consumption schedule intersects the 45-degree line,

• A) the MPC is 1.00.
• B) the APC is 1.00.
• C) saving is equal to consumption.
• D) the economy is in equilibrium.

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Definitions:

Period Cost

Any cost that cannot be capitalized into prepaid expenses, inventory, or fixed assets. A non-manufacturing cost that is expensed in the period in which it is incurred.

Special Order

A special order refers to a one-time or unusual request from a customer that can require unique production or ordering requirements outside of normal operations.

Product Costs

Costs directly associated with the production of goods or services, including direct materials, direct labor, and manufacturing overhead.

Current Profits

The earnings a company has generated during a particular period, not taking into account future liabilities or investments.