Cost Flow Is in the Order in Which Costs Were

question 162

Multiple Choice

Cost flow is in the order in which costs were incurred when using

• A) average cost
• B) last-in, first-out
• C) first-in, first-out
• D) weighted average

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Definitions:

Competitive Equilibrium

A market state where supply equals demand, leaving no incentive for price changes as long as external conditions remain constant.

Homothetic Preferences

Preferences where if a consumer prefers a bundle of goods A to B, they will also prefer a scaled-up version of A to the same scale-up of B, maintaining the same proportions.

Marginal Rate of Substitution

How quickly a consumer agrees to trade one good for another, aiming to keep their level of pleasure steady.

Edgeworth Box

A diagram used in economics to show the distribution of resources, illustrating how different mixes of goods can lead to an optimal allocation.