Franco Is Owner and Operator of a Cleaning Service Who

question 51

Multiple Choice

Franco is owner and operator of a cleaning service who uses the accrual method of accounting.He receives the following payments on December 31,2016,the last business day of his tax year: ​
How much of the $11,400 collected by Franco on December 31 must be included in his 2016 gross income?

• A)$5,000
• B)$6,400
• C)$7,400
• D)$9,000
• E)$11,400

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Definitions:

Constant Returns to Scale

Constant Returns to Scale occur when an increase in all inputs leads to a proportional increase in output, indicating linear growth.

Output Q₁

Refers to the quantity of goods or services produced at the first level of output in a production process.

Output Q₃

A specified level of output or production, often denoted as Q₃ to represent a particular point on a supply or production curve.

Diseconomies of Scale

The phenomenon where increasing production leads to an increase in the average costs of production, opposite of economies of scale.