For Allocative Efficiency to Hold

question 118

Multiple Choice

For allocative efficiency to hold,

• A) price must equal marginal revenue of the last unit sold.
• B) price must equal the marginal cost of the last unit produced.
• C) average variable cost is minimised in production.
• D) average total cost is minimised in production.

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Definitions:

Depreciation Methods

Various techniques used to systematically allocate the cost of a tangible asset over its useful life, including straight-line, declining balance, and units of production methods.

Goodwill

An intangible asset representing the excess value paid for a company over its book value, reflecting factors like brand reputation or customer relations.

Classified Balance Sheet

A balance sheet that organizes a company's assets, liabilities, and equity into subcategories for more detailed and understandable financial analysis.

Adjusted Trial Balance

A financial statement that lists all account balances in the general ledger after adjustments are made, ensuring the total credits equal total debits.