Where an Area of Interest Contracts in Size and Subsequently

question 11

Multiple Choice

Where an area of interest contracts in size and subsequently becomes two distinct operations:

• A) all costs to date must be apportioned equally between the two new operations.
• B) all future costs must be accounted for separately.
• C) only the costs up to and including production should be apportioned between the two sites.
• D) pre-production cost should be accumulated and then apportioned between the two operations based on the size of the new areas of interest.

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Definitions:

Economic Losses

The decrease in wealth or resources experienced by an individual, organization, or country, typically measured by cost incurred that are not offset by gains.

Value of Resources

The worth placed on natural, human, and capital assets based on their utility in producing goods and services.

Long Run

A period of time in economic analysis where all factors of production and costs are variable, allowing for full adjustment to change.

Average Cost Curve

A graphical representation that shows the cost per unit of output at different levels of production.