Which of the Following Criteria Has the Presumption That the More-Profitable

question 11

Multiple Choice

Which of the following criteria has the presumption that the more-profitable divisions have a greater ability to absorb corporate administration costs?

• A) the fairness or equity criterion
• B) the ability to bear criterion
• C) the cause-and-effect criterion
• D) the benefits-received criterion

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Definitions:

Marginal Utility

The supplementary enjoyment or value someone gains from consuming one more unit of a certain good or service.

Utility Maximization

The process by which individuals select the combination of goods and services that maximizes their level of satisfaction, given their budget constraint.

Diminishing Utility

is an economic principle stating that as a person consumes more of a good, the marginal utility of each additional unit decreases.

Aggregate Demand Curve

A curve that shows the relationship between the overall price level in the economy and the total demand for goods and services at that price level.