If the Cost of an Item of Inventory Is $60

question 193

Multiple Choice

If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is

• A) $15
• B) $60
• C) $75
• D) $135

---

Definitions:

Perfectly Competitive Industry

An industry characterized by many buyers and sellers, where no single entity can influence the market price of the product.

Marginal Cost

The price of manufacturing an incremental unit of a product.

Perfectly Competitive Market

A market structure characterized by an infinite number of buyers and sellers, identical products, no barriers to entry or exit, and perfect information among all participants.

Short-run Industry

A period in which at least one factor of production is fixed, and firms can only partially adjust their production levels.