The Lerner Index in the Paper Industry Is 0

question 103

Multiple Choice

The Lerner index in the paper industry is 0.58.Based on this information,a firm charging $3.25 per ream of paper should have a marginal cost of:

• A) $0.
• B) $1.365.
• C) $1.885.
• D) $3.25.

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Definitions:

FIFO

"First In, First Out," an inventory valuation method where goods first received are the first ones sold.

LIFO

"Last In, First Out," an inventory valuation method where the last items added to inventory are the first ones to be used or sold.

Average Cost

This refers to the cost of producing a good or service, calculated by dividing the total costs of production by the number of units produced.

Lower Of Cost

An accounting principle that values inventory at the lower of its historical cost or the current market value, to record losses in value.