Resources Are Efficiently Allocated When Production Occurs at That Output

question 135

Multiple Choice

Resources are efficiently allocated when production occurs at that output level where price:

• A) equals marginal cost.
• B) equals marginal revenue.
• C) is greater than marginal revenue.
• D) is equal to average variable cost.

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Definitions:

Cost Of Goods Sold

Refers to the total expense directly related to the production of goods or services a company sells.

Current Ratio

A liquidity ratio; current assets are divided by current liabilities to indicate a company’s ability to pay its short-term debt. This ratio does not provide as much certainty as the acid test ratio.

Current Assets

Assets that can be converted into cash or used within one year or the normal operating cycle of the business, whichever is longer.