Potential Output Is Defined as __________

question 45

Multiple Choice

Potential output is defined as __________.

• A)the amount of total output if all inputs were utilized at their long-run,sustainable levels
• B)what an economy produces when it is at capacity
• C)the current level of output
• D)the amount of output where inflation is zero
• E)none of the above

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Definitions:

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to individual units of production, calculated at the beginning of a period.

Machine-Hours

The total hours that production machinery is operated within a given period, rephrased as the aggregate operational time of production equipment.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used as a basis for allocating labor costs to products.

Manufacturing Overhead

Manufacturing overhead encompasses all of the indirect costs associated with the production of goods, such as utilities, maintenance, and the salaries of management.